Exhibit 99.1
MKDWELL TECH INC.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MKDWELL TECH INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| As of | ||||||||
| December 31, 2025 | June 30, 2026 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted Time deposit, net | ||||||||
| Restricted cash | ||||||||
| Notes receivables | ||||||||
| Accounts receivable, net | ||||||||
| Amounts due from related parties, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets, net | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Intangible assets, net | ||||||||
| Property, plant and equipment, net | ||||||||
| Real estate properties for lease, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | ||||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Short-term bank borrowings | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Accounts payable | ||||||||
| Amounts due to related parties | ||||||||
| Long-term bank borrowings-current portion | ||||||||
| Convertible Note | ||||||||
| Operating lease liabilities- current | ||||||||
| Deferred revenue- current | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Long-term bank borrowings | ||||||||
| Other non-current liabilities | ||||||||
| Deferred revenue, non-current | ||||||||
| Operating lease liabilities- non current | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies | ||||||||
| Equity (deficit) | ||||||||
| Ordinary shares ( par value; shares authorized as of December 31, 2025 and June 30, 2026, respectively; and ordinary shares issued as of December 31, 2025 and June 30, 2026, respectively; and ordinary shares outstanding as of December 31, 2025 and June 30, 2026, respectively) | ||||||||
| Class A Preferred shares ( par value; shares issued and outstanding as of December 31, 2025 and June 30, 2026)* | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ( | ) | ||||||
| Treasury Stock ( | ( | ) | ||||||
| MKDWELL Tech Inc. shareholders’ equity (deficit) | ( | ) | ||||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total equity (deficit) | ( | ) | ||||||
| TOTAL LIABILITIES AND EQUITY (DEFICIT) | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-1 |
MKDWELL TECH INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling expenses | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Research and development expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other loss: | ||||||||
| Interest expenses, net | ( | ) | ( | ) | ||||
| Other income, net | ||||||||
| Total other loss | ( | ) | ( | ) | ||||
| Loss before income tax expense | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| Net loss attributable to ordinary shareholders | ( | ) | ( | ) | ||||
| Other comprehensive (loss) income | ||||||||
| Foreign currency translation adjustment attributable to non-controlling interest | ||||||||
| Foreign currency translation adjustment attributable to parent company | ( | ) | ( | ) | ||||
| Total other comprehensive (loss) income | $ | $ | ( | ) | ||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Total comprehensive (loss)/gain attributable to non-controlling interest | ( | ) | ||||||
| Total comprehensive (loss) attributable to ordinary shareholders | ( | ) | ( | ) | ||||
| Weighted average shares outstanding used in calculating basic and diluted loss per share - basic and diluted* | ||||||||
| Loss per share - basic and diluted* | $ | ) | $ | ) | ||||
| Share-Based Compensation expenses as follows (Note 9) | ||||||||
| General and administrative expenses | ||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-2 |
MKDWELL TECH INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
(In U.S. dollars, except for share and per share data, or otherwise noted)
| Ordinary Shares | Preferred Shares | Treasury Shares | Additional paid-in | Accumulated other comprehensive | Accumulated | Total shareholders’ equity/ | Non-controlling | Total Equity/ | ||||||||||||||||||||||||||||||||||||||||
| Shares * | Amount | Shares* | Amount | Shares* | Amount | capital | income | Deficits | (deficit) | interests | (deficit) | |||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares for private placement | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary Shares Issued from Debt-to-Equity Conversion | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Shares Issued from Debt-to-Equity Conversion | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited)* | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Share base payment | 709,740 | 2,129 | - | - | - | - | 5,221,557 | - | - | 5,223,686 | - | 5,223,686 | ||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Repurchase of Pre-Delivery Shares of Convertible Note | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| (Unaudited)* | ||||||||||||||||||||||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
MKDWELL TECH INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of Time deposit | ( | ) | ||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from bank borrowings | ||||||||
| Repayments of bank borrowings | ( | ) | ||||||
| Repayments of Long-term bank borrowings | ( | ) | ( | ) | ||||
| Proceeds from borrowings from related parties | ||||||||
| Repayment of borrowings from related parties | ( | ) | ( | ) | ||||
| Repayment of borrowings from third parties | ( | ) | ( | ) | ||||
| Proceeds from financing sale and leaseback | ||||||||
| Repayments of financing sale and leaseback | ( | ) | ( | ) | ||||
| Proceeds from issuance of ordinary shares for private placement | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes | ||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, and restricted cash, beginning of the period | ||||||||
| Cash and cash equivalents, end of the period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest expense paid | ||||||||
| Supplemental disclosures of non-cash activities: | ||||||||
| Reclassification of long-term and short-term borrowings | ||||||||
| Real estate properties reclassified to property, plant and equipment | ( | ) | ( | ) | ||||
| Real estate properties reclassified to intangible assets | ( | ) | ( | ) | ||||
| Ordinary Shares Issued from Debt-to-Equity Conversion | ||||||||
| Preferred Shares Issued from Debt-to-Equity Conversion | ||||||||
| Proceeds from maturity of time deposits | ||||||||
| Repurchase of common stock | ( | ) | ||||||
| Repurchase of Pre-Delivery Shares of Covertible Note | ( | ) | ||||||
| Loan to a third party | ( | ) | ||||||
| Repayment of the Convertible Note by a related party | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
MKDWELL Tech Inc. (“MKD”) was incorporated under the laws of the British Virgin Islands (“BVI”) on July 25, 2023. MKDWELL Limited (“MKD BVI”) was incorporated in the BVI on March 30, 2023 as a nonoperating shell company. MKD Technology Inc. (“MKD Taiwan”) was incorporated in Taiwan on September 26, 2006.
MKD, through its subsidiary MKD Taiwan and MKD Taiwan’s subsidiaries (collectively, the “Company”), primarily engages in designing and manufacturing industrial embedded system and automotive electronics in Taiwan and mainland China.
As of June 30, 2026, the Company and its major subsidiaries were as follows:
| Subsidiaries | Date of incorporation | Place of incorporation | Percentage of ownership | Principal activities | ||||||
| MKD | ||||||||||
| MKD BVI | % | |||||||||
| MKD Taiwan | % | |||||||||
| MKDWELL (Samoa) Technology Inc. (“MKD Samoa”) | % | |||||||||
| MKDWELL (Shanghai) Technology Ltd. (“MKD Shanghai”) | % | |||||||||
| MKD Jiaxing | % | |||||||||
| Cetus Capital | % | |||||||||
| F-5 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES-Continued
Share Combination
On January 9, 2026, the Company approved a 30-for-1 reverse stock split (the “Share Combination”) of its ordinary and Class A preferred shares, effective at 9:00 a.m. Eastern Time on January 26, 2026. On the effective date, every 30 issued and outstanding ordinary shares were automatically combined into one new -par value ordinary share, with the issued ordinary shares retrospectively restated from to approximately as of December 31, 2025.
Share Repurchase
In
January 2026, the Company repurchased ordinary shares (after the Share Combination; million shares before) from certain
existing shareholders for an aggregate purchase price of approximately US$
Share-Based Compensation
On April 22, 2026, the Company issued ordinary shares to four consultants under the 2026 Equity Incentive Plan (see Note 9 — Share-Based Compensation).
For
the aforementioned transactions, as of June 30, 2026, the Company’s total issued ordinary shares were , and the Company
had ordinary shares with par value(the “Ordinary Shares”) outstanding, and the Company held treasury
shares with an aggregate cost of US$
For the aforementioned Share Combination, the weighted average number of ordinary shares outstanding used in calculating basic and diluted net loss per ordinary share was retrospectively restated to and for the six months ended June 30, 2025 and 2026, respectively.
The loss per share before and after the retrospective adjustments are as follows：
| For the six months ended June 30, | ||||||||||||||||
| 2025 | 2026 | |||||||||||||||
| Before | After | |||||||||||||||
| (Unaudited) | ||||||||||||||||
| Net loss per share attributable to ordinary shareholders | ||||||||||||||||
| - Basic and diluted | $ | ) | ) | ) | ||||||||||||
| Weighted average shares used in calculating net loss per share | ||||||||||||||||
| - Basic and diluted (Restate) | ||||||||||||||||
| F-6 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
2. GOING CONCERN
The
Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates
the realization of assets and liquidation of liabilities during the normal course of operations. The Company incurred net losses of US$
The Company has historically depended on financing from bank, related parties and third-party investors to support its operations. The Company’s future operations are dependent upon equity or debt financing and its ability to generate profits through operations at an indeterminate time in the future. The Company cannot assure that it will be successful in completing an equity or debt financing or in achieving or maintaining profitability in the near term. The Company’s financial statements do not give effect to any adjustments relating to the carrying values and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Security and Exchange Commission and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in conformity with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2025.
In the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of the results for the full year.
| F-7 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued
(b) Use of estimates
The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but not limited to, the allowance for credit loss, lower of cost or net realizable value of inventory, useful lives of long-lived assets, impairment of long-lived assets and valuation allowance on deferred tax assets. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.
(c) Functional currency and foreign currency translation
The functional and reporting currency of the Company is the United States Dollar (“US$”). The Company’s operating subsidiaries in Taiwan, China and mainland China use their respective currencies New Taiwan dollar (“NT$”) and Renminbi (“RMB”) as their functional currencies.
The financial statements of MKD BVI and its subsidiaries, other than subsidiaries with functional currency of US$, are translated into US$ using the exchange rate as of the balance sheet date for assets and liabilities and average exchange rate for the period for income and expense items. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution.
Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the condensed consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income included in consolidated statements of changes in shareholders’ equity (deficit). Gains and losses from foreign currency transactions are included in the Company’s consolidated statements of operations and comprehensive loss.
The following table outlines the currency exchange rates that were used in preparing the consolidated financial statements:
| June 30, 2025 | December 31, 2025 | June 30, 2026 | ||||||||||
| Period-end spot rate | Average rate | Period-ended spot rate | Average rate | Period-ended spot rate | Average rate | |||||||
| (Unaudited) | (Unaudited) | |||||||||||
| US$ against RMB | US$1=RMB | US$1=RMB | US$1=RMB | US$1=RMB | US$1=RMB | US$1=RMB | ||||||
| US$ against NT$ | US$1=NT$ | US$1=NT$ | US$1=NT$ | US$1=NT$ | US$1=NT$ | US$1=NT$ | ||||||
| F-8 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued
(d) Restricted cash
As at December 31, 2025, the restricted cash balances include funds that have been frozen due to the Company’s involvement in legal litigation and the balances were released in January 2026 as a result of the Company’s settlement with the counterparty.
(e) Time deposit
Time deposits represent interest-bearing financial assets with fixed maturities and pre-determined fixed or floating interest rates, held with banks or other eligible financial institutions. Their accounting treatment under US GAAP is governed by ASC 305, ASC 320 and ASC 835, and is prescribed as follows: time deposits with an original maturity of three months or less are classified as cash and cash equivalents by virtue of their high liquidity. For time deposits with an original maturity exceeding three months, if the Company has both the positive intent and the ability to hold such deposits to maturity, they are classified as held-to-maturity debt securities. On the balance sheet, such deposits are presented as short-term assets or other current assets if their remaining maturity is 12 months or less as of the reporting date, and as non-current investments or other non-current assets if their remaining maturity exceeds 12 months.
All time deposits are measured at amortized cost. Any premium or discount arising from the difference between the deposit amount and the face value is amortized over the deposit term using the effective interest method in accordance with ASC 835-20. Interest income is accrued ratably over the deposit term, which includes the amortization of any related premium or discount, and is presented as interest income or investment income in the income statement.
The Company assesses the impairment of held-to-maturity time deposits in accordance with ASC 320-10-35 and ASC 326 (the current expected credit loss model). A credit loss allowance is recognized when the present value of the expected cash flows from the deposit (discounted at the effective interest rate) is lower than its carrying amount. No credit loss allowance is recognized if the depository institution has minimal credit risk and there is no objective evidence of credit deterioration.
Upon maturity redemption or early withdrawal of time deposits, the difference between the carrying amount of the deposit and the actual consideration received (including accrued but unpaid interest) is recognized as a gain or loss on the derecognition of financial assets in the income statement, presented within interest income or other income and expenses. Any penalties incurred on early withdrawal are either offset against interest income or recognized as a separate expense line item in the income statement.
As
of December 31, 2025,
| F-9 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued
(f) Fair value measurement
Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are:
● Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
● Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
● Level 3—Unobservable inputs which are supported by little or no market activity
Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
| F-10 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued
(f) Fair value measurement-continued
Financial assets and liabilities of the Company primarily consist of cash and cash equivalents, time deposit, restricted cash, accounts receivable, net, other receivables included in prepaid expenses and other current assets, short-term and long-term bank borrowings, lease liabilities, accounts payable, amounts due to/due from related parties, long-term borrowings, other payables included in accrued expenses and other current liabilities. As of December 31, 2025 and June 30, 2026, the carrying values of these financial instruments, except for other non-current assets, non-current portion of long-term banks borrowings, and non-current portion of lease liabilities, approximated their respective fair values due to the short-term maturity of these instruments.
The Company’s non-financial assets, such as property, plant and equipment, real estate property for lease and ROU assets would be measured at fair value only if they were determined to be impaired.
(g) Revenue recognition
The Company’s revenues are generated through (i) sales of manufactured electronic products, (ii) commissioned processing service, (iii) technical service, (iv) rental income and (v)others, among which technical service is a new revenue type added by the Company in 2026.
Technical service
The Company provides technical services to customers, mainly including technical support services in connection with its products, and enters into contracts with them specifying the scope of services, deliverables and service fees. Under each contract, the Company identifies only one performance obligation of providing the agreed technical services. The Company recognizes revenue at a point in time upon the customer’s acceptance of the agreed deliverables, with the amount of the determined service charges on the contracts. There was no variable consideration nor financing component.
| F-11 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued
The following table disaggregates the Company’s revenue for the six months ended June 30, 2025 and 2026:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| By revenue type | ||||||||
| Sales of manufactured electronic products | $ | $ | ||||||
| Commissioned processing service | ||||||||
| Technical service | ||||||||
| Rental income | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
Advance
from customers consists of payments received related to unsatisfied performance obligations at the end of the period. The advance from
customers amounted to US$
(h) Segment reporting
The Company adopted ASU 2023-07 in the fourth quarter of 2024, in accordance with the required adoption timeline for public entities. The adoption of this ASU did not materially impact its financial statement disclosures, as the Company’s existing segment reporting practices were already in alignment with the new requirements. The Company uses the management approach in determining its operating segments. The Company’s chief operating decision maker (“CODM”) identified as the Company’s Chief Executive Officer, relies upon the consolidated results of operations as a whole when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by CODM, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. As the Company’s long-lived assets are substantially located in the PRC, no geographical segments are presented.
| F-12 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET
Prepayments and other current assets, net consisted of the following:
| As of | ||||||||
| December 31，2025 | June 30，2026 | |||||||
| (Unaudited) | ||||||||
| Loan to a third party (1) | $ | $ | ||||||
| Deductible input VAT | ||||||||
| Prepaid expense | ||||||||
| Advance to suppliers | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| (1) |
5. LEASES
The Company had entered into an operating lease agreement for factories located in Taiwan.
| As of | ||||||||
| December 31，2025 | June 30，2026 | |||||||
| (Unaudited) | ||||||||
| Operating lease right-of-use assets, net | $ | $ | ||||||
| Operating lease liabilities, current | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| F-13 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
5. LEASES-continued
The components of lease expense were as follows within the consolidated statements of comprehensive loss:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Operating lease: | ||||||||
| Operating lease expense | $ | $ | ||||||
| Short-term lease expense | ||||||||
| Total operating lease expenses | $ | $ | ||||||
| Total lease expenses | $ | $ | ||||||
For
the six months ended June 30, 2025 and 2026, cash paid for operating leases were US$
Supplemental balance sheet information related to leases was as follows:
| As of | ||||||||
| December 31，2025 | June 30，2026 | |||||||
| (Unaudited) | ||||||||
| Weighted average discount rate: | ||||||||
| Operating lease | % | % | ||||||
| Weighted average remaining lease term: | ||||||||
| Operating lease | ||||||||
As of June 30, 2026, the future minimum rent payable under non-cancelable operating and financing leases were:
| For the six months ended June 30, | Amount | |||
| (Unaudited) | ||||
| The remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities, net of interest | $ | |||
| F-14 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
6. BORROWINGS
As of December 31, 2025 and June 30, 2026 the bank borrowings were for working capital and capital expenditure purposes.
| As of | ||||||||
| December 31，2025 | June 30，2026 | |||||||
| (Unaudited) | ||||||||
| Current portion: | ||||||||
| Short-term bank borrowings | ||||||||
| Bank of Jiaxing (1) | $ | $ | ||||||
| Long-term bank borrowings, current portion | ||||||||
| Bank of Jiaxing (1) | ||||||||
| Subtotal | $ | $ | ||||||
| Non-current portion: | ||||||||
| Long-term bank borrowings | ||||||||
| Bank of Jiaxing (1) | $ | $ | ||||||
| Subtotal | $ | $ | ||||||
| Total | $ | $ | ||||||
| (1) |
| F-15 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
6. BORROWINGS-continued
The
interest expenses were US$
As of June 30，2026 the Company’s long-term bank borrowings will be due according to the following schedule:
| For the fiscal years ending December 31, | Amount | |||
| (Unaudited) | ||||
| 2026 remainder | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total long-term bank borrowings | $ | |||
7. CONVERTIBLE NOTE
On
July 24, 2024, the Company entered into a securities purchase agreement with an investor, pursuant to which the investor agreed to purchase
from the Company a convertible promissory note in the aggregate principal amount of RMB
| F-16 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
7. CONVERTIBLE NOTE-continued
On
November 26, 2024, the Company entered into a securities purchase agreement (the “November 2024 SPA”) with Streeterville
Capital, LLC, a Utah limited liability company (the “Investor”), pursuant to which the Company issued to the Investor (i)
an unsecured convertible note (“Convertible Note”), in the principal amount of $
In
addition,
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.
| F-17 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
7. CONVERTIBLE NOTE-continued
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$ upon the issuance of the Pre-delivery Shares and will pay the same amount to the investors upon the return of Pre-delivery Shares, respectively. The Company accounted for the share lending arrangement as an issuance cost and recorded at fair value upon issuance date against additional paid-in capital. Although legally issued, the Pre-delivery Shares were not considered outstanding and therefore excluded from basic and diluted loss per share unless default of the share lending arrangement occurs, at which time the Pre-delivery Shares would be included in the basic and diluted loss per share calculation.
On May 13, 2025, the Company and the Investor entered into an amendment to the Convertible Note (the “Amendment”). The Amendment revised the definition of the “Conversion Price” under the Note, which now means 80% multiplied by the lower of: (a) the closing trade price of the Ordinary Shares on the prior trading day, and (b) the average closing trade price of the Ordinary Shares for the prior 10 trading days.
Pursuant to ASC 470-50 and ASC 815, the Amendment only modifies the conversion price and does not create a substantial difference between the original and modified debt instruments, and thus extinguishment accounting and debt restructuring treatment are not applicable. No gain or loss is recognized, nor is remeasurement of the Convertible Note required, on the amendment date. The Company has accounted for the Amendment in accordance with the relevant provisions of the aforementioned standards.
During the year ended December 31, 2025, the Company issued an aggregate of (after the Share Combination: ) ordinary shares in connection with the conversion of the Convertible Note, with the conversion price determined in accordance with the terms and conditions set forth above. Accordingly, the carrying value of the Convertible Note was derecognized to the extent of conversion, and ordinary share capital and additional paid-in capital were increased correspondingly.
In
March 2026, the Company fully repaid the outstanding balance of the Convertible Note, including principal, accrued and unpaid interest
and all other contractual obligations thereunder, with funds of US$
| F-18 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
As of December 31, 2025, the Company’s total issued ordinary shares were (after the Share Combination), and the Company had (after the Share Combination) ordinary shares with par value(the “Ordinary Shares”) outstanding.
In
January 2026, the Company repurchased ordinary shares (after the Share Combination; million shares before) from certain
existing shareholders for an aggregate purchase price of approximately US$
On April 22, 2026, the Company issued ordinary shares to four consultants under the 2026 Equity Incentive Plan (see Note 9 — Share-Based Compensation).
For the aforementioned transactions, as of June 30, 2026, the Company’s total issued ordinary shares were , and the Company had ordinary shares with par value(the “Ordinary Shares”) outstanding.
| F-19 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
The Company accounts for share-based payments in accordance with ASC 718, as amended by ASU 2018-07, which extends the guidance to share-based transactions with non-employees. Awards are measured at grant-date fair value and recognized as expense when the related services are received.
2026 Equity Incentive Plan
In March 2026, the Board of Directors adopted the MKDWELL Tech Inc. 2026 Equity Incentive Plan (the “2026 Plan”), administered by the Compensation Committee of the Board. On April 22, 2026, the Company issued an aggregate of shares of common stock to four consultants ( shares each) under the 2026 Plan as the sole consideration for M&A advisory, business consulting, and internal control and corporate governance services. The shares were fully vested upon issuance and are not subject to cash compensation, performance conditions, forfeiture provisions, or repurchase rights. The grant date was determined to be April 22, 2026, being the date on which the Company and the consultants agreed on the terms of the awards. Accordingly, the Company recognized share-based compensation expense of $ ( shares times $, the closing market price on the grant date) in full in general and administrative expenses during the six months ended June 30, 2026. The shares were included in the weighted-average number of common shares outstanding used in computing basic and diluted earnings per share from the issuance date.
10. RESTRICTED NET ASSETS
A
significant portion of the Company’s operations are conducted through its mainland China subsidiaries, the Company’s ability
to pay dividends is primarily dependent on receiving distributions of funds from subsidiaries. Relevant PRC statutory laws and regulations
permit payments of dividends by subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting
standards and regulations, and after it has met the PRC requirements for appropriation to statutory reserves. The Company is required
to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based
on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations
to the statutory surplus reserve are required to be at least
As a result of these PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. As of December 31, 2025 and June 30, 2026, the aggregate restricted net assets included in the Company’s consolidated net assets, comprising the paid-in capital and additional paid-in capital of its subsidiaries, were .
| F-20 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
11. TAXATION
British Virgin Islands (“BVI”)
The Company is incorporated in the BVI. Under the current laws of the BVI, the Company is not subject to income or capital gains taxes. Additionally, dividend payments are not subject to withholdings tax in the BVI.
Taiwan
MKD
Taiwan, a subsidiary incorporated in Taiwan, is subject to a tax rate of
Samoa
MKD Samoa was incorporated in Samoa and, under the current laws of Samoa, is not subject to tax on its income or capital gains. Additionally, dividend payments are not subject to withholdings tax in Samoa.
Mainland China
Under
the Law of the People’s Republic of China on Enterprise Income Tax (“New EIT Law”), which was effective from January
1, 2008, both domestically-owned enterprises and foreign-invested enterprises are subject to a uniform tax rate of
EIT
grants preferential tax treatment to High and New Technology Enterprises (“HNTEs”) at a rate of
The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2025 and June 30, 2026, the Group did not have any unrecognized uncertain tax positions and the Group does not believe that its unrecognized tax benefits will change over the next twelve months. For the six months ended June 30, 2025 and 2026, the Company did not incur any interest and penalties related to potential underpaid income tax expenses.
As of June 30, 2026, the tax years ended December 31, 2019 through 2025 for the Group’s subsidiaries in the PRC are generally subject to examination by the PRC tax authorities. As of June 30, 2026, the tax years ended December 31, 2019 through 2025 for the Group’s subsidiary in the Taiwan is generally subject to examination by the Taiwan tax authorities.
| F-21 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
11. TAXATION-continued
Deferred income taxes are recognized for the tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases, and operating loss carry-forwards. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company assesses the realizability of deferred tax assets by evaluating whether it is more likely than not that some or all of the deferred tax assets will be realized. Based upon the weight of available evidence, including the Company’s history of operating losses, accumulated deficit and the expectation of continuing losses in the foreseeable future, the Company determined that it is more likely than not that its deferred tax assets will not be realized. Accordingly, the Company has recorded a full valuation allowance against its net deferred tax assets as of June 30, 2026 and December 31, 2025.
For the six months ended June 30, 2026 and 2025, the Company did not record any income tax expense as it continued to incur operating losses and no current income tax liability was expected.
12. RELATED PARTY TRANSACTIONS
| (a) | Related parties |
The following is a list of related parties which the Company has transactions with:
| No. | Name of Related Parties | Relationship | ||
| 1 | Ming-Chia Huang | |||
| 2 | Ming-Chao Huang | |||
| 3 | Cetus Sponsor LLC | |||
| 4 | AWinner Limited | |||
| 5 | Ms. Ya-Hui | |||
| 6 | Lu Huang |
| F-22 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
12. RELATED PARTY TRANSACTIONS-continued
(b) Amounts from related parties
Amounts due from related parties consisted of the following for the periods indicated:
| As of | ||||||||||
| December 31,2025 | June 30,2026 | |||||||||
| (Unaudited) | ||||||||||
| Related parties | Nature | |||||||||
| Cetus Sponsor LLC | Loan to a related party | $ | $ | |||||||
| AWinner Limited | Loan to a related party | |||||||||
| Total | $ | $ | ||||||||
On
March 13, 2025, Cetus Sponsor LLC, AWinner Limited, and MKD BVI entered into a debt transfer agreement, pursuant to which the debt of
US$
(c) Amounts due to related parties
Amount due to related parties consisted of the following for the periods indicated:
| As of | ||||||||||
| December 31,2025 | June 30,2026 | |||||||||
| (Unaudited) | ||||||||||
| Related parties | Nature | |||||||||
| Ming-Chia Huang (1) | Loan from related parties | $ | $ | |||||||
| Cetus Sponsor LLC | Loan from related parties | |||||||||
| AWinner Limited | Loan from related parties | |||||||||
| Ming-Chao Huang (2) | Loan from related parties | |||||||||
| Lu Huang(4) | Loan from related parties | |||||||||
| Ming-Chia Huang | Expense paid on behalf the Company | |||||||||
| Ming-Chao Huang | Expense paid on behalf the Company | |||||||||
| Ms. Ya-Hui | Expense paid on behalf the Company | |||||||||
| Total | $ | $ | ||||||||
| F-23 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
12. RELATED PARTY TRANSACTIONS-continued
(c) Amounts due to related parties-continued
| (1) |
| (2) |
(d) Related party transactions
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Interest expenses of loans from related parties | ||||||||
| Ming-Chia Huang | $ | $ | ||||||
| Ming-Chao Huang | ||||||||
| Lu Huang | ||||||||
| Proceeds of loans from related parties | ||||||||
| Ming-Chao Huang | ( | ) | ( | ) | ||||
| Ming-Chia Huang | ( | ) | ( | ) | ||||
| Debt to equity conversion | ||||||||
| AWinner Limited | ||||||||
| Ming-Chia Huang | ||||||||
| Ms. Ya-Hui | ||||||||
| Repay of loans from related parties | ||||||||
| Ming-Chia Huang | ||||||||
| Ming-Chao Huang | ||||||||
| Repayment of the Convertible Note | ||||||||
| Ming-Chia Huang | ||||||||
| Repurchase of Pre-Delivery Shares of Convertible Note | ||||||||
| Ming-Chia Huang | ||||||||
| F-24 |
MKDWELL TECH INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
13. SUBSEQUENT EVENTS
On July 17, 2026, the Company entered into a share purchase agreement (the “SPA”) to acquire % of the issued share capital of Landvision Inc. (“Landvision BVI”), a British Virgin Islands holding company that owns % of Landvision Technology Limited (“Landvision HK”), a Hong Kong-based developer and supplier of AI-enabled smart-home and IoT products. The consideration was satisfied entirely through the issuance of new ordinary shares at an issue price of US$ per share, representing aggregate consideration of US$. The acquisition was completed in August 2026, and the consideration shares represent approximately % of the Company’s enlarged issued ordinary shares. Accordingly, the acquisition is not reflected in the accompanying financial statements as of June 30, 2026.
The Company will account for the acquisition in accordance with ASC 805, Business Combinations, using the acquisition method. Because the acquisition was completed subsequent to the balance sheet date, it constitutes a non-recognized subsequent event and is not reflected in the accompanying condensed consolidated financial statements as of and for the six months ended June 30, 2026. The Company is in the process of evaluating the financial effect of the acquisition and finalizing the purchase accounting.
| F-25 |