F-1: MKDWELL Tech Inc. Amends Warrant Agreement and Registers Resale of Ordinary Shares

MKDWELL Tech Inc. amends its existing warrant agreement and files for the resale of up to 11,045,094 ordinary shares by selling securityholders.

Summary

• MKDWELL Tech Inc. has entered into a warrant assignment agreement, dated July 31, 2024, with Cetus Capital Acquisition Corp. and Continental Stock Transfer & Trust Company, amending the existing warrant agreement from January 31, 2023.
• The amendment assigns all of Cetus Capitals rights and obligations under the existing warrant agreement to MKDWELL Tech Inc.
• The warrants will now be exercisable for ordinary shares of MKDWELL Tech Inc. instead of common stock of Cetus Capital.
• The agreement also updates references to the company, common stock, and business combination within the existing warrant agreement.
• The document includes a new notice clause for the warrant agreement.
• The effectiveness of the agreement is subject to the occurrence of the SPAC Merger and the closing of the Business Combination Agreement.
• The document also includes a preliminary prospectus for the resale of up to 11,045,094 ordinary shares by selling securityholders.
• These shares were originally issued or are issuable pursuant to a securities purchase agreement dated November 26, 2024, and an amended satisfaction and discharge of indebtedness agreement dated July 24, 2024.
• The company will not receive any proceeds from the sale of these shares.
• The company's ordinary shares and warrants began trading on Nasdaq on August 1, 2024, under the symbols MKDW and MKDWW, respectively.
• The closing price of the company's ordinary shares on January 21, 2025, was $0.553 per share, and the closing price of the warrants was $0.0207 per warrant.
• The company is a holding company with operations primarily in the PRC and Taiwan, and is subject to various legal and operational risks associated with being based in China.
• The company has submitted a filing with the CSRC on September 21, 2023, in connection with the business combination with Cetus Capital, and believes it is not within the scope of the Overseas Listing Trial Measures.
• The company believes it will not be subject to cybersecurity review with the Cyberspace Administration of China.
• The company has obtained all requisite licenses, permits, and approvals from relevant authorities in the PRC that are material to its operations.
• The company may rely on dividends and other distributions from its PRC operating subsidiaries for its cash and financing requirements.
• The company's ordinary shares and warrants may be prohibited from trading on a national exchange or over-the-counter markets under the Holding Foreign Companies Accountable Act (the HFCAA).
• The company is an emerging growth company and a foreign private issuer, which provides certain exemptions from reporting requirements.
• The company has entered into an Amended Satisfaction and Discharge Agreement with D. Boral Capital LLC on July 24, 2024, and a securities purchase agreement with Streeterville Capital, LLC on November 26, 2024.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company has completed its business combination and is now listed on Nasdaq, it faces significant risks and challenges, including regulatory hurdles, financial uncertainties, and potential trading restrictions. The company's reliance on debt financing and the potential for dilution also contribute to a negative sentiment.

Positives

• The company has successfully completed its business combination and is now listed on Nasdaq.
• The company has obtained all necessary licenses and permits for its operations in the PRC.
• The company believes it is not subject to the Overseas Listing Trial Measures or cybersecurity review in China.
• The company has secured additional financing through a securities purchase agreement with Streeterville Capital, LLC.

Negatives

• The company may be subject to trading restrictions under the HFCAA if the PCAOB cannot inspect its auditor.
• The company is subject to various legal and operational risks associated with being based in China.
• The company's ordinary shares and warrants have experienced significant price volatility.
• The company is a holding company and relies on dividends from its subsidiaries for cash and financing requirements.

Risks

• The company is subject to various legal and operational risks associated with being based in China.
• The company may be subject to trading restrictions under the HFCAA if the PCAOB cannot inspect its auditor.
• The company's ordinary shares and warrants have experienced significant price volatility.
• The company is a holding company and relies on dividends from its subsidiaries for cash and financing requirements.
• The company may be required to obtain additional licenses and approvals in the future.
• The company's business may be affected by changes in PRC laws and regulations.
• The company may face difficulties in transferring cash between its subsidiaries and parent company due to PRC regulations.
• The company may be subject to claims of infringement of third-party intellectual property rights.
• The company may fail to attract or retain qualified personnel.
• The company's business may be adversely affected by obsolete inventories.
• The company is subject to foreign currency risk.
• The company's business is impacted by general economic conditions in its markets.
• The company may experience operating losses during downturns in the camper van industry.
• The company may be subject to cybersecurity breaches.
• The company may be required to complete filing procedures with the China Securities Regulatory Commission (CSRC).
• The company may be considered a PRC resident enterprise under the PRC Enterprise Income Tax Law.
• The company is subject to restrictions on paying dividends or making other payments, which may restrict the Companys ability to satisfy the liquidity requirements.
• The company is subject to foreign exchange control imposed by Taiwan authorities, which may affect the paying dividends, repatriating the interest or making other payments to us.
• The company may be required to obtain approvals from Taiwan authority for investment in MKDs Taiwan subsidiary if the shareholding of MKD Taiwan reaches the threshold for such approval.
• The company may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because the Company is a business company incorporated under the laws of the BVI, the Company conducts substantially all of its operations and a majority of its directors and executive officers (or candidates) reside outside of the United States.
• The company is not subject to the supervision of the Financial Services Commission of the British Virgin Islands and so our shareholders are not protected by any regulatory inspections in the British Virgin Islands.
• The company may not be able to generate sufficient cash or raise sufficient funds from external investors to service all of its obligations and indebtedness and may be forced to take other actions to satisfy obligations under its indebtedness, which may not be successful.
• Anti-takeover provisions contained in the Companys memorandum and articles of association, as well as provisions of BVI law, could impair a takeover attempt.
• The market price of the Ordinary Shares is likely to be highly volatile, and you may lose some or all of your investment.
• Volatility in the Companys stock price could subject the Company to securities class action litigation.
• The future sales of shares by the Companys shareholders and future exercise of registration rights may adversely affect the market price of the Companys Ordinary Shares.

Future Outlook

The company is registering the resale of ordinary shares to permit selling securityholders to sell their shares from time to time, in amounts, at prices and on terms determined at the time of offering.

Industry Context

The document reflects the ongoing trend of companies utilizing SPAC mergers to go public and the complexities of operating in international markets, particularly in China, with evolving regulatory landscapes.

Comparison to Industry Standards

• The use of a SPAC merger to go public is a common practice, especially for companies seeking a faster route to the public markets than a traditional IPO.
• The company's reliance on a holding company structure with operating subsidiaries in China and Taiwan is similar to other companies with international operations.
• The company's focus on automotive electronics and intelligent systems aligns with the growing demand for advanced technology in the automotive industry.
• The company's need to comply with both U.S. and PRC regulations is a common challenge for companies with operations in China.
• The company's risk of being delisted under the HFCAA is a concern shared by other companies with auditors based in China.
• The company's use of convertible notes for financing is a common practice for companies seeking capital.

Stakeholder Impact

• Shareholders may experience volatility in the share price and potential dilution.
• Employees may be affected by changes in the company's operations and financial performance.
• Customers may be affected by changes in the company's products and services.
• Suppliers may be affected by changes in the company's purchasing patterns.
• Creditors may be affected by the company's ability to repay its debts.

Next Steps

• The company will file a registration statement to register the resale of ordinary shares by selling securityholders.
• The company will continue to operate its business and seek to generate revenue and profits.
• The company will monitor and comply with evolving regulations in the PRC and Taiwan.
• The company will seek to maintain its listing on Nasdaq.
• The company will continue to evaluate its financial position and seek additional financing as needed.

Key Dates

Keywords

warrant agreement, ordinary shares, resale, SPAC Merger, business combination, Nasdaq, HFCAA, CSRC, cybersecurity, China, Taiwan, BVI, securities purchase agreement, convertible note, D. Boral Capital LLC, Streeterville Capital, LLC