20-F: MKDWELL Tech Inc. Completes Business Combination with Cetus Capital Acquisition Corp., Files 20-F Report

Sentiment:

Shell Company Report 15 August 2024 4:46 PM

MKDWELL Tech Inc. finalizes its merger with Cetus Capital Acquisition Corp. and files a Form 20-F report detailing the transaction and related agreements.

Capital raiseMKDWELL Tech Inc. and its subsidiary MKDWELL (Jiaxing) Electronic Technology Ltd. entered into a Securities Purchase Agreement with an investor.The investor agreed to purchase from the Borrower a convertible promissory note in the aggregate principal amount of RMB35,000,000 (approximately $4.8 million).The Company also agreed that it would issue an additional 150,000 of its ordinary shares to the Investor within ten (10) business days after the Investor receives and provides to the Company the applicable permit or approval from the Peoples Republic of China authority with respect to the foreign currency exchange regulations to hold such shares, including such required approval pursuant to SAFE Circular No. 37.The Convertible Note shall bear interest at the rate of ten percent (10%) per annum, and the entire unpaid principal balance of the Convertible Note plus any accrued and unpaid interest thereon (the Note Amount) is payable two years from the issuance date.At any time beginning ninety (90) days after the issuance date of the Convertible Note, the Note Amount may be converted into ordinary shares of the Company at a price per share equal to the lower of (x) $5.00 or (y) the fifteen (15) trading day volume weighted average price of the ordinary shares of the Company, provided that in no event will the conversion price be lower than $2.00.

Summary

MKDWELL Tech Inc. has filed a Form 20-F report following the completion of its business combination with Cetus Capital Acquisition Corp.
The business combination agreement was initially entered into on June 20, 2023.
The transaction involved the merger of Cetus Capital with a subsidiary of MKDWELL Tech Inc., making Cetus Capital a wholly-owned subsidiary.
On July 31, 2024, the business combination was consummated.
In connection with the business combination, MKDWELL Tech Inc. entered into a Securities Purchase Agreement for a convertible promissory note of RMB35,000,000 (approximately $4.8 million).
The Convertible Note Financing closed on August 12, 2024.
As of August 1, 2024, MKDWELL Tech Inc. had 16,788,342 ordinary shares and 6,036,875 warrants outstanding.
The company's ordinary shares and warrants are now traded on The Nasdaq Stock Market LLC under the symbols MKDW and MKDWW, respectively.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The document primarily describes the completion of a business combination and related agreements. While the completion of the merger is positive, the auditor's concerns about the company's ability to continue as a going concern temper the overall sentiment.

Positives

The business combination with Cetus Capital Acquisition Corp. has been successfully completed.
MKDWELL Tech Inc. is now a publicly traded company on Nasdaq.
A new convertible note financing provides additional capital.
Lock-up agreements are in place to provide stability to the share price.

Negatives

The auditor's report for MKDWELL Limited includes an explanatory paragraph regarding the company's ability to continue as a going concern.
The auditor's report for MKDWELL Tech Inc. includes an explanatory paragraph regarding the company's ability to continue as a going concern.
The auditor's report for Cetus Capital Acquisition Corp. includes an explanatory paragraph regarding the company's ability to continue as a going concern.

Risks

The company's revenues and costs are primarily denominated in Renminbi or New Taiwan Dollars, exposing it to foreign exchange risk.
The value of the Renminbi against the U.S. dollar is subject to changes by the central government policies and to international economic and political developments.
The company could be exposed to material risks due to changes in market interest rates in the future.
The company's future performance is subject to various risk factors described in the Form F-4.

Future Outlook

The Company's Board of Directors will consider whether or not to institute a dividend policy following the completion of the Business Combination, depending on various factors including financial condition and cash requirements.

Industry Context

The announcement reflects a trend of companies seeking public listing through SPAC mergers, providing a faster route to the public market compared to traditional IPOs.

Comparison to Industry Standards

Comparable companies that have gone public via SPACs include Digital World Acquisition Corp. (DWAC) and Lucid Group (LCID).
DWAC experienced significant volatility post-merger due to its association with a controversial social media platform.
Lucid Group faced production challenges after its SPAC merger, impacting its stock performance.
MKDWELL Tech Inc.'s success will depend on its ability to execute its business plan and manage its financial obligations effectively, similar to the challenges faced by other companies that have completed SPAC mergers.

Stakeholder Impact

Shareholders will see their shares now traded on Nasdaq under the symbol MKDW.
Employees will continue their roles within the newly combined company.
Customers and suppliers will likely experience minimal immediate changes.
Creditors will be subject to the terms of the existing and newly issued debt.

Next Steps

MKDWELL Tech Inc. will continue to operate as a publicly traded company.
The company will need to execute its business plan and manage its financial obligations.
The Board of Directors will consider whether or not to institute a dividend policy.

Key Dates

Date	Description
January 31, 2023	Existing Warrant Agreement dated between SPAC and the Warrant Agent.
January 31, 2023	Date of Insider Letter among the SPAC, the Sponsor and each of the SPACs officers, directors and director nominees.
January 31, 2023	Date of Private Placement Unit Purchase Agreement between the SPAC and the Sponsor.
June 20, 2023	Date of the Business Combination Agreement between Cetus Capital Acquisition Corp., MKD Technology Inc., MKDWELL Limited and Ming-Chia Huang.
July 25, 2023	MKDWELL Tech Inc. incorporated.
July 24, 2024	MKDWELL Tech Inc. and its subsidiary entered into a Securities Purchase Agreement for a convertible promissory note.
July 31, 2024	Business Combination consummated; Cetus Capital became a wholly-owned subsidiary of MKDWELL Tech Inc.
July 31, 2024	Date of Lock-Up Agreement between MKDWELL Tech Inc. and certain insiders.
July 31, 2024	Date of Amended and Restated Registration Rights Agreement.
August 1, 2024	MKDWELL Tech Inc. had 16,788,342 ordinary shares and 6,036,875 warrants outstanding.
August 12, 2024	Convertible Note Financing closed.
July 31, 2029	Warrants expire.

Keywords

Business Combination, MKDWELL Tech Inc., Cetus Capital Acquisition Corp., Merger, Warrants, Ordinary Shares, Convertible Note, Nasdaq, Registration Rights, Lock-up Agreement

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