XMax Inc 10-Q for FY2026 Q2
XMax Inc. (XMAX)
About this 10-Q
XMax Inc filed this 10-Q on August 14, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.74M
- up 7.1% from $2.56M a year earlier
- Net income
- $32.43M
- compared with a net loss of $289.91K a year earlier
- Diluted EPS
- $0.53
- compared with -$0.02 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.
☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES
☐ NO
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares of common stock outstanding as of August 12, 2026.
XMAX Inc.
Table of Contents
| i |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
XMAX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2026 AND DECEMBER 31, 2025
(Stated in US Dollars except for Number of Shares)
| June 30, 2026 | December 31, 2025 | |||||||
| Unaudited | Audited | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Advance to suppliers | ||||||||
| Inventories | ||||||||
| Deposits to others | ||||||||
| Loan to third party | ||||||||
| Prepaid expenses | ||||||||
| Other receivables | ||||||||
| Total Current Assets | ||||||||
| Noncurrent Assets | ||||||||
| Plant, property and equipment, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Investment in fund | ||||||||
| Lease deposit | ||||||||
| Total Noncurrent Assets | ||||||||
| Total Assets | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
XMAX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONT’D)
AS OF JUNE 30, 2026 AND DECEMBER 31, 2025
(Stated in US Dollars except for Number of Shares)
| June 30, 2026 | December 31, 2025 | |||||||
| Unaudited | Audited | |||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Operating lease liabilities, current | ||||||||
| Finance lease liabilities - current | ||||||||
| Advance from customers | ||||||||
| Loan from shareholders | ||||||||
| Accrued liabilities and other payables | ||||||||
| Other loan | ||||||||
| Security deposit | ||||||||
| Total Current Liabilities | ||||||||
| Noncurrent Liabilities | ||||||||
| Other loan | ||||||||
| Finance lease liabilities - non-current | ||||||||
| Convertible notes | ||||||||
| Deferred tax liability | ||||||||
| Total Noncurrent Liabilities | ||||||||
| Total Liabilities | ||||||||
| Contingencies and Commitments | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, $ par value; shares authorized, and shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
XMAX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Sales | $ | $ | $ | $ | ||||||||||||
| Cost of Sales | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss From Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expenses) | ||||||||||||||||
| Non-operating (expense) income | ( | ) | ( | ) | ||||||||||||
| Loss on impairment of goodwill | ( | ) | ||||||||||||||
| Unrealized gain | ||||||||||||||||
| Foreign exchange transaction loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income (expense), net | ( | ) | ( | ) | ||||||||||||
| Financial expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other (Expenses) Income, Net | ( | ) | ( | ) | ||||||||||||
| Income (Loss) Before Income Taxes | ( | ) | ( | ) | ||||||||||||
| Income Tax (Expense) Benefit | ( | ) | ( | ) | ||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ||||||||||||
| Other Comprehensive Income (Loss) | ||||||||||||||||
| Foreign currency translation | ( | ) | ( | ) | ||||||||||||
| Net Income (Loss) and Comprehensive Income (Loss) | ( | ) | ( | ) | ||||||||||||
| Weighted average shares outstanding - Basic and Diluted | ||||||||||||||||
| Net Income (loss) per share of common stock | ||||||||||||||||
| Basic and Diluted | $ | $ | ) | $ | $ | ) | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
XMAX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
Three Months Ended June 30, 2026
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common stock | Paid-in | Comprehensive | (Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficits) | Equity | |||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock issued to investors | ||||||||||||||||||||||||
| Foreign currency translation income | - | |||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
Three Months Ended June 30, 2025
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common stock | Paid-in | Comprehensive | (Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficits) | Equity | |||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock issued to employees | ||||||||||||||||||||||||
| Stock issued to consultants | ||||||||||||||||||||||||
| Foreign currency translation loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
XMAX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
Six Months Ended June 30, 2026
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common stock | Paid-in | Comprehensive | (Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficits) | Equity | |||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock issued to investors | ||||||||||||||||||||||||
| Foreign currency translation income | ||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
Six Months Ended June 30, 2025
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common stock | Paid-in | Comprehensive | (Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficits) | Equity | |||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock issued to employees | ||||||||||||||||||||||||
| Stock issued to consultants | ||||||||||||||||||||||||
| Stock issued to creditor | ||||||||||||||||||||||||
| Stock issued to suppliers | ||||||||||||||||||||||||
| Stock issued to an investor | ||||||||||||||||||||||||
| Foreign currency translation loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
XMAX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
| 2026 | 2025 | |||||||
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Write down of inventories | ||||||||
| Stock based compensation expense to employee | ||||||||
| Stock based compensation expense to non-employee | ||||||||
| Unrealized gain | ( | ) | ||||||
| Loss on impairment of goodwill | ||||||||
| Changes in deferred tax | ||||||||
| Expected (reversal) of credit losses | ( | ) | ||||||
| Finance lease interest expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Advance to suppliers | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Contract liabilities | ( | ) | ||||||
| Accrued liabilities and other payables | ( | ) | ( | ) | ||||
| Taxes payable | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Acquisition of fixed assets | ( | ) | ||||||
| Loan to third party | ( | ) | ||||||
| Investment in fund of Preamble Capital LLC | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ||||||
| Cash Flows From Financing Activities | ||||||||
| Repayment to loan from shareholder | ( | ) | ( | ) | ||||
| Repayment to SBA loan | ( | ) | ( | ) | ||||
| Proceed from loan from shareholder | ||||||||
| Principal payment of finance lease liabilities | ( | ) | ||||||
| Interest paid on finance lease liabilities | ( | ) | ||||||
| Proceed from issuing common stocks | ||||||||
| Net Cash Provided by Financing Activities | ||||||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | $ | $ | ||||||
| Net Increase in Cash and Cash Equivalents | ||||||||
| Cash and Cash Equivalents, Beginning of Period | ||||||||
| Cash and Cash Equivalents, Ending of Period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Continuing operations: | ||||||||
| Cash paid during period for: | ||||||||
| Income tax paid | $ | $ | ||||||
| Interest expense | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
XMAX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
Note 1 - Organization and Description of Business
Organization and Business
XMax Inc. (“XMAX” or the “Company”), formerly known as Nova LifeStyle, Inc. or Stevens Resources, Inc., was incorporated in the State of Nevada on September 9, 2009.
The Company is a U.S. holding company with no material assets other than the ownership interests of its subsidiaries through which it markets, designs and sells furniture worldwide: Nova Furniture Limited domiciled in the British Virgin Islands (“Nova Furniture”), Nova Furniture Ltd. domiciled in Samoa (“Nova Samoa”), Diamond Bar Outdoors, Inc. domiciled in California (“Diamond Bar”), i Design Blockchain Technology, Inc. domiciled in California (“i Design”), Nova Living (M) SDN. BHD. domiciled in Malaysia (“Nova Malaysia”), XMax AI, Inc. domiciled in Nevada (“XMax AI”), Elonx AI Holdings PTE. LTD. domiciled in Singapore (“Elonx AI”), Xmax Capital Ltd. domiciled in Samoa (“Xmax Samoa”), Xmax Alpha Holdings Ltd. domiciled in Cayman Islands (“Xmax Alpha”), Xmax Beta Holdings Ltd. domiciled in Cayman Island (“Xmax Beta”), Xmax Delta Holdings Ltd. domiciled in Cayman Islands (“Xmax Delta) and Xmax Sigma Holdings Ltd. domiciled in Cayman Islands (“Xmax Sigma). The Company had three former subsidiaries Bright Swallow International Group Limited domiciled in Hong Kong (“Bright Swallow” or “BSI”) which was sold in January 2020, Nova Furniture Macao Commercial Offshore Limited domiciled in Macao (“Nova Macao”) which was de-registered and liquidated in January 2021 and Nova Living (HK) Group Limited domiciled in Hong Kong (“Nova HK”) which was de-registered and liquidated in February 2023.
Nova Macao was organized under the laws of Macao on May 20, 2006, and was a wholly owned subsidiary of Nova Furniture. Nova Macao was a trading company, importing, marketing and selling products designed and manufactured by third-party manufacturers for the international market. Diamond Bar was incorporated in California on June 15, 2000. Diamond Bar markets and sells products manufactured by third-party manufacturers under the Diamond Sofa brand to distributors and retailers principally in the U.S. market.
On December 7, 2017, the company incorporated i Design under the laws of the State of California. The purpose of i Design is to build the Company’s own blockchain technology team. This company will focus on the application of blockchain technology in the furniture industry, including encouraging and facilitating interactions among designers and customers, and building a blockchain-powered platform that enables designers to showcase their products, including current and future furniture designs. This company is in the planning stage and has had minimal operations through December 31, 2025.
On
December 12, 2019, the Company acquired Nova Malaysia at cost of $
On
January 7, 2020, the Company transferred its entire interest in Bright Swallow to Y-Tone (Worldwide) Limited, an unrelated third party,
for cash consideration of $
On October 14, 2020, the Macao Trade and Investment Promotion Institute invalidated licenses for offshore companies under an Order of Repeal of Legal Regime of the Offshore Services by Macao Special Administrative Region. Nova Macao then entered into a de-registration process and its business was taken over by Nova HK. Nova Macao completed the de-registration and liquidation process in January 2021.
On
November 5, 2020, Nova LifeStyle acquired Nova HK at cost of $
| 7 |
On September 24, 2025, the Company incorporate Xmax Capital Ltd. in Samoa (“Xmax Samoa”). On October 3, 2025, Xmax Samoa incorporated Xmax Alpha Holdings Ltd. in Cayman Islands. On October 14, 2025, Xmax Samoa incorporated Xmax Beta Holdings Ltd. and Xmax Delta Holdings Ltd. in Cayman Islands. On October 15, 2025, Xmax Samoa incorporated Xmax Sigma Holdings Ltd. in Cayman Islands. Xmax Samoa is a holding company with no actual business operations. Xmax Delta Holdings Ltd. and Xmax Sigma Holdings Ltd. currently do not have any business operations. On April 1, 2026, the Company incorporated XMax AI Inc. in the State of Nevada.
On April 1, 2026, the Company incorporate XMax AI, Inc. in Nevada (“XMax AI”). On June 4, 2026, the Company incorporate Elonx AI Holdings PTE. LTD in Singapore (“Elonx AI”). Both subsidiaries’ primary business is the provision of enterprise AI infrastructure and Model-as-a-Service (MaaS) solutions, enabling businesses to integrate large language model capabilities into their core operations through cloud-based inference APIs. Their services include enterprise AI APIs, technical support, and AI infrastructure for applications such as intelligent customer service, knowledge management, workflow automation, AI agents, long-context retrieval-augmented generation (RAG), AI coding assistants, multimodal content generation, and AI-powered research and search. Revenues are generated based on customers’ actual compute usage, and the Company does not engage in token trading, exchange, or market-making activities.
The “Company,” “XMax,” “we,” “us,” and “Nova” collectively refer to XMax Inc., formerly known as Nova LifeStyle, the U.S. parent, and its subsidiaries, Nova Furniture, Nova Samoa, Diamond Bar, i Design, Nova Malaysia, XMax AI, Elonx AI, Xmax Samoa, Xmax Alpha Holdings Ltd, Xmax Beta Holdings Ltd, Xmax Delta Holdings Ltd and Xmax Sigma Holdings Ltd.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding financial reporting. The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.
Reverse split
On
May 22, 2023, the Company filed a Certificate of Change with the Secretary of State of Nevada with an effective date of May 22, 2023,
at which time a
Amendments to Articles of Incorporation
On September 5, 2023, the Company filed the Certificate of Change (the “Amendment”) with the Secretary of State for the State of Nevada to amend its Articles of Incorporation to increase the amount of authorized shares of its common stock, par value $ per share, from to . The Amendment was approved by the Company’s Board of Directors (the “Board”) on June 28, 2023 and by the shareholders at a special meeting of the Company’s shareholders held on August 31, 2023. The Amendment does not affect the rights of the Company’s shareholders and was effective immediately upon filing.
On November 3, 2025, the Company filed a Certificate of Change (the “Share Increase Amendment”) with the Secretary of State for the State of Nevada to amend its Articles of Incorporation to increase the amount of authorized shares of its common stock, par value $ per share, from shares to shares. The Share Increase Amendment was approved by the Company’s Board of Directors (the “Board”) on September 15, 2025 and by the shareholders at a special meeting of the Company’s shareholders held on October 31, 2025. The Share Increase Amendment does not affect the rights of the Company’s shareholders and was effective immediately upon filing.
| 8 |
On November 3, 2025, the Company filed a Certificate of Amendment (the “Name Change Amendment”) with the Secretary of State for the State of Nevada to amend its Articles of Incorporation to change the Company’s name from “Nova LifeStyle, Inc.” to “XMax Inc.” The Name Change Amendment was approved by the Board on September 15, 2025 and by the shareholders at a special meeting of the Company’s shareholders held on October 31, 2025. The Name Change Amendment was effective immediately upon filing.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. In accordance with ASC 250, the changes in estimates will be recognized in the same period of changes in facts and circumstances. The Company bases its estimates on past experiences and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, fair value estimation of investment, the allowance for credit loss, valuation of inventories, the valuation of stock-based compensation, income taxes and unrecognized tax benefits, assumptions used in assessing impairment of long-lived assets and goodwill, and loss contingencies. Actual results could differ from those estimates.
Business Combination
For a business combination, the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree are recognized at the acquisition date and measured at their fair values as of that date. In a business combination achieved in stages, the identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, are recognized at the full amounts of their fair values. In a bargain purchase in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any noncontrolling interest in the acquiree, that excess in earnings is recognized as a gain attributable to the acquirer.
Deferred tax liability and assets are recognized for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 740-10.
Goodwill
Goodwill is the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with ASC Topic 350, “Intangibles-Goodwill and Other,” goodwill is not amortized but is tested for impairment, annually or more frequently when circumstances indicate a possible impairment may exist. Impairment testing is performed at a reporting unit level. An impairment loss generally would be recognized when the carrying amount of the reporting unit exceeds its fair value, with the fair value of the reporting unit determined using discounted cash flow (“DCF”) analysis. A number of significant assumptions and estimates are involved in the application of the DCF analysis to forecast operating cash flows, including the discount rate, the internal rate of return and projections of realizations and costs to produce. Management considers historical experience and all available information at the time the fair values of its reporting units are estimated.
ASC Topic 350 also permits an entity to first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the single step goodwill impairment test is required to be performed. Otherwise, no further testing is required. Performing the qualitative assessment involved identifying the relevant drivers of fair value, evaluating the significance of all identified relevant events and circumstances, and weighing the factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The Company completed the required testing of goodwill for impairment as of December 31, 2025, and determined that goodwill was impaired because of the current financial condition of the Company and the Company’s inability to generate future operating income without substantial sales volume increases, which are highly uncertain. Furthermore, the Company anticipates future cash flows indicate that the recoverability of goodwill is not reasonably assured.
The
goodwill write-down was reflected as an impairment loss, $
| 9 |
Intangible Assets
Intangible
assets consist primarily of computer software acquired for internal use. Acquired intangible assets are initially recorded at the acquisition-date
fair value. Intangible assets are amortized on a straight-line basis over their estimated useful lives and are carried at cost less accumulated
amortization. The estimated useful life of computer software are generally from
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, cash at banks and mutual funds that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value.
Accounts Receivable
Since January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using the modified retrospective transition method. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. Upon adoption, the Company changed the impairment model to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets.
The Company maintains an allowance for credit losses and records the allowance for credit losses as an offset to accounts receivable and the estimated credit losses charged to the allowance is classified as “General and administrative expenses” in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss). The Company assesses collectability by reviewing accounts receivable on aging schedules because the accounts receivable were primarily consisted of receivables arising from product sales. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the balances, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Delinquent account balances are written-off against the allowance for expected credit loss after management has determined that the likelihood of collection is not probable.
Accounts receivable consisted of the following as of the date indicated:
Schedule of Accounts Receivable
As of June 30, 2026 | As of December 31, 2025 | |||||||
| Accounts receivable | $ | |||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | |||||||
Expected credit losses (reversal) provision consisted for the following as of the dated indicated:
Schedule of Expected Credit Losses (Reversal) Provision
| For the six months period ended | For the year ended | |||||||
June 30, 2025 | December 31, 2025 | |||||||
| Balance – January 1 | $ | |||||||
| Expected (reversal) of credit losses | ( | ) | ||||||
| Balance – June 30 / December 31 | $ | |||||||
The
expected credit (reversal) losses provision for the six months ended June 30, 2026 and 2025 was $
Advances to Suppliers
Advances to suppliers represent amounts paid to suppliers in advance for goods that are yet to be delivered and from which future economic benefits are expected to flow to the Company within the normal operating cycle. Based on its historical record and in normal circumstances, the Company receives goods within 4 to 6 months from the date the advance payment is made. During the six months ended June 30, 2026 and December 31, 2025, no provision was made on advances to suppliers.
| 10 |
Inventories
Inventories
consist of finished goods. Inventory costs include the purchase price and other expenditures that are directly attributable to bringing
the inventories to their present location and condition. Cost of inventories are computed using the weighted average cost method. Inventories
are written down to estimated net realizable value, which considers historical usage, expected demand, anticipated sales price, and other
factors. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly
reflect inventory value. For the six months ended June 30, 2026 and 2025, the Company wrote down $
Property, Plant, and Equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any. Expenditures for maintenance and repairs are expensed as incurred, while additions, renewals and improvements are capitalized. When property, plant and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the respective accounts, and any gain or loss is included in consolidated statements of loss and comprehensive loss. Depreciation of property, plant and equipment is provided using the straight-line method for substantially all assets with no salvage value and estimated lives as follows:
Schedule of Plant, Property and Equipment Estimated Lives Under Straight-Line Method
| Category | Estimated useful lives | |
| Computer and office equipment | ||
| Decoration and renovation |
Investment in Funds (Non-Marketable Investments)
For
the six months ended June 30, 2026 and December 31, 2025, the Company invested $
As
of June 30, 2026 and December 31, 2025, these funds measured at fair value were $
Impairment of Long-Lived Assets
Long-lived assets, which include property, plant and equipment and right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. As of December 31, 2025, the Company determined that goodwill was impaired because of the current financial condition of the Company and the Company’s inability to generate future operating income without substantial sales volume increases, which are highly uncertain. Furthermore, the Company anticipates future cash flows indicate that the recoverability of goodwill is not reasonably assured.
| 11 |
Research and Development
Research
and development costs are related primarily to the Company designing and testing its new products during the development stage. Since
2023, the Company through Nova Malaysia has been developing Virtual and Augmented reality software and AI system for potential consulting
business. In addition, since 2024, the Company acquired IT systems for AI-Calculation Engine, Nova Living DesignXperience System and
Payment IT System which were integrated into our current IT system. The entire system was far from complete as it required to integrate
with other components in order to be functional and it was not in operation and was eventually abandoned due to the close down of the
business of Nova Malaysia. Research and development expenses were $
Income Taxes
Income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
In its interim financial statements, the Company follows the guidance in
ASC 270 “Interim reporting” and ASC 740 “Income Taxes” whereby the Company utilizes the expected annual effective
rate in determining its income tax provision. The income tax expense for the six and three months ended June 30, 2026 is $
The Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.
Under the provisions of ASC Topic 740, when tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
XMax Inc. (formerly Nova Lifestyle, Inc.), Diamond Bar Outdoors, Inc. (“Diamond Bar”), and XMax AI Inc. are subject to U.S. federal and state income taxes. Nova Furniture Limited was incorporated in the British Virgin Islands; Nova Furniture Ltd. and Xmax Capital Ltd. were incorporated in Samoa; and Xmax Alpha Holdings Ltd., Xmax Beta Holdings Ltd., Xmax Delta Holdings Ltd., and Xmax Sigma Holdings Ltd. were incorporated in the Cayman Islands. There is no income tax for companies domiciled in the British Virgin Islands, Samoa, or the Cayman Islands. Accordingly, the Company’s consolidated financial statements do not present any income tax provision related to the British Virgin Islands, Samoa, or Cayman Islands tax jurisdictions where these entities are domiciled. Elonz AI Holdings Pte. Ltd. was incorporated in Singapore during the second quarter of 2026 and is subject to Singapore corporate income tax. Accordingly, the Company records a Singapore income tax provision, when applicable. Nova Living Ltd. was incorporated in Malaysia and ceased business operations; the entity completed its de-registration with the Malaysian government in the first quarter of 2026.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA extends permanently, with modifications, tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act and restores and makes permanent many business provisions, such as full expensing for domestic research and development and capital investments. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The enactment of the OBBBA does not have a material impact on the results from operations for the current period.
| 12 |
The Tax Cuts and Jobs Act of 2017 (the “Act”) created new taxes on certain foreign-sourced earnings such as global intangible low-taxed income (“GILTI”) under IRC Section 951A, which is effective for the Company for tax years beginning after January 1, 2018. For tax years beginning after December 31, 2025, the One Big Beautiful Bill Act renamed GILTI as net CFC tested income (“NCTI”) and modified the Section 951A calculation. For the quarter ended June 30, 2026, the Company has calculated its best estimate of the impact of NCTI, if any, in its income tax provision in accordance with applicable tax law and guidance available as of the date of this filing.
The Tax Cuts and Jobs Act of 2017 also amended IRC Section 174 to require specified research and experimental expenditures to be capitalized and amortized for tax years beginning after December 31, 2021. The One Big Beautiful Bill Act subsequently restored current expensing for domestic research and experimental expenditures paid or incurred in tax years beginning after December 31, 2024, while foreign research and experimental expenditures remain subject to capitalization and amortization over 15 years. For the six months ended June 30, 2026, the Company expensed current-year U.S. research and experimental expenditures for federal income tax purposes. The Company did not elect to accelerate the deduction of unamortized domestic research and experimental expenditures from prior years and continues to amortize such amounts over the remaining applicable amortization period. Since the Company’s research and experimental expenditures were incurred within the United States and the amount is immaterial, the Company does not anticipate a material impact to its income tax provision.
As
of June 30, 2026 and December 31, 2025, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately
$
As of June 30, 2026, unrecognized tax benefits were approximately . The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was as of June 30, 2026. As of June 30, 2025, unrecognized tax benefits were approximately . The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was as of June 30, 2025.
A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the six months ended June 30, 2026 and 2025, is as follows:
Schedule of Unrecognized Tax Benefits
| Gross UTB | ||||||||
| 2026 | 2025 | |||||||
| Balance – January 1 | ||||||||
| Foreign exchange adjustment | ||||||||
| Balance – June 30 | $ | $ | ||||||
As of June 30, 2026 and December 31, 2025, the Company had cumulatively accrued approximately and for estimated interest and penalties related to unrecognized tax benefits. The Company recorded interest and penalties related to unrecognized tax benefits as a component of income tax (benefit)/expense, which totaled and for the six months ended June 30, 2026 and 2025, respectively; and and for the three months ended June 30, 2026, and 2025, respectively, related to the Company’s continuing operations. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next 12 months.
XMax Inc. (formerly Nova Lifestyle, Inc.), Diamond Bar and I Design are subject to U.S. federal and state income taxes and tax years 2020-2024 remain open to examination by tax authorities in the U.S.
Revenue Recognition
The Company recognizes revenues when its customers obtain control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASC-606: (i) identifies contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenues when (or as) it satisfies the performance obligation.
The Company derives its revenues primarily from two business segments to (i) sales of residential and commercial furniture, and (ii) provide API-based (Application Programming Interface) services.
| 13 |
Sales of residential and commercial furniture
Revenue from product sales is recognized when the customer obtains control of our product, which typically occurs upon shipment to the customer. Each customer order is being distinct and separately identifiable from other customer orders as a single performance obligation to deliver the ordered product in exchange for consideration. The Company offers credit sales to customers with credit periods range from 30 to 90 days. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.
Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, returns and rebates. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company’s customer.
The Company’s sales policy allows for product returns within the warranty period if the product is defective and the defects are the Company’s fault. As alternatives to the product return option, the customers have the option of requesting a discount from the Company for products with quality issues or of receiving replacement parts from the Company at no cost. The amount for product returns, the discount provided to the Company’s customers, and the costs for replacement parts were immaterial for the three months ended June 30, 2026 and 2025.
The Company considers itself acting as a principal for sales of goods which is evidenced by (i) the Company is primarily responsible for fulfilling the promise to provide the specified goods, (ii) the Company has inventory risk before the specified goods have been transferred to a customer or after transfer of control to the customer, (iii) the Company has discretion in establishing the price for the specified good. Thus, the Company’s’ revenue is recognized at a point in time when a promised good is delivered to a customer.
API-based services revenue
API-based service revenue primarily consists of service income from providing via our recently deployed AI platform, enabling the customer to integrate, distribute, and commercialize these capabilities globally under its own branding. Our platform supports high availability and scalable deployment, enabling customers to efficiently integrate advanced AI capabilities into their commercial applications. The Company acts as the principal in these arrangements as it maintains control over the platform, establishes pricing, and bears the primary responsibility for service fulfillment. Transaction prices are determined based on the total consideration specified in the contracts, net of any volume discounts or price concessions.
The Company offers these services through two primary billing models: (1) a usage-based (post-paid) model, where customers are billed based on actual monthly API consumption, and (2) a prepaid model, where customers purchase usage limits upfront. For the prepaid model, upfront payments are initially recorded as deferred revenue (contract liabilities). Under both models, revenue is recognized over time as the underlying API services are continuously rendered and consumed by the customer. Pursuant to certain contract terms, upon contract expiration or early termination, any unearned remaining balance of customer deposits is calculated and refunded to the customer within the timeframe specified in the applicable contract.
Disaggregation of Revenue
The following table provides information about disaggregated revenue by product or service type:
Schedule of Disaggregated Revenue by Product or Service
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For six months ended June 30 | Three Month Ended June 30 | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue from sales | ||||||||||||||||
| Residential and commercial furniture | $ | $ | $ | $ | ||||||||||||
| API-based services | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
| 14 |
Cost of Sales
Cost of sales consists of costs of finished goods purchased from third-party manufacturers, write-downs of inventory and API-based fee.
Shipping and Handling Costs
Shipping
and handling costs related to delivery of finished goods are included in selling expenses. During the six months ended June 30, 2026
and 2025, shipping and handling costs (credits) were and ($
Advertising
Advertising
expenses consist primarily of costs of promotion and marketing for the Company’s image and products, and costs of direct advertising,
and are included in selling expenses. The Company expenses all advertising costs as incurred. Advertising expense was $
The Company applies ASC 718 (“ASC 718”), Compensation - Stock Compensation, to account for its employee share-based payments. In accordance with ASC 718 -10, the share-based payment transactions with employees and non-employees, such as share options, be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period, with a corresponding addition to equity. Under this method, compensation cost related to employee share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period. Unrestricted stock awards are fully vested upon issuance, and compensation expense is recognized equal to the fair value of the award on the grant date. The fair value of unrestricted stock is determined based on the closing market price of the Company’s common stock on the grant date.
Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares pertaining to warrants, stock options, and similar instruments had been issued and if the additional common shares were dilutive. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding unvested restricted stock, options and warrants, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).
Schedule of Reconciliations of Basic and Diluted Loss Per Share
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average shares outstanding – Basic and Diluted * | ||||||||||||||||
| Net income (loss) per share of common stock | ||||||||||||||||
| Basic and Diluted | $ | $ | ) | $ | ) | |||||||||||
| * |
For the six and three months ended June 30, 2026 and 2025, and shares of unvested restricted stock and shares exercisable under warrants were excluded from the EPS calculation, as their effect were anti-dilutive, respectively.
| 15 |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist primarily of accounts receivable, other receivables and investment in funds. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.
The following table sets forth information as to the Company’s customers that accounted for 10% or more of the Company’s sales and accounts receivable for the six and three months ended June 30, 2026 and 2025.
Schedule of Concentration Credit Risk
Six Months Ended June 30, 2026 | As of June 30, 2026 | |||||||
| Customer | Percentage of Total Sales | Percentage of accounts receivable | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
Six Months Ended June 30, 2025 | As of June 30, 2025 | |||||||
| Customer | Percentage of Total Sales | Percentage of accounts receivable | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
Three Months Ended June 30, 2026 | As of June 30, 2026 | |||||||
| Customer | Percentage of Total Sales | Percentage of accounts receivable | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
Three Months Ended June 31, 2025 | As of June 30, 2025 | |||||||
| Customer | Percentage of Total Sales | Percentage of accounts receivable | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
Two customers accounted for 23% (
Two customers accounted for 38% (
The following table sets forth information as to the Company’s suppliers that accounted for 10% or more of the Company’s total purchases, accounts payable and advance to suppliers for the six and three months ended June 30, 2026 and 2025.
Six Months Ended June 30, 2026 | As of June 30, 2026 | As of June 30, 2026 | ||||||||||
| Supplier | Percentage of Total Purchases | Balance of Accounts Payable | Balance of Advance to Supplier | |||||||||
| A | % | $ | ||||||||||
| B | % | |||||||||||
| C | % | |||||||||||
| D | % | |||||||||||
Six Months Ended June 30, 2025 | As of June 30, 2025 | As of June 30, 2025 | ||||||||||
| Supplier | Percentage of Total Purchases | Balance of Accounts Payable | Balance of Advance to Supplier | |||||||||
| A | % | $ | ||||||||||
| B | % | |||||||||||
| C | % | |||||||||||
| D | % | |||||||||||
| 16 |
Three Months Ended June 30, 2026 | As of June 30, 2026 | As of June 30, 2026 | ||||||||||
| Supplier | Percentage of Total Purchases | Balance of Accounts Payable | Balance of Advance to Supplier | |||||||||
| A | % | $ | ||||||||||
| B | % | |||||||||||
| C | % | |||||||||||
| D | % | |||||||||||
Three Months Ended June 30, 2025 | As of June 30, 2025 | As of June 30, 2025 | ||||||||||
| Supplier | Percentage of Total Purchases | Balance of Accounts Payable | Balance of Advance to Supplier | |||||||||
| A | % | $ | ||||||||||
| B | % | |||||||||||
| C | % | |||||||||||
| D | % | |||||||||||
The Company purchased its products from two and two
major vendors during the six months ended June 30, 2026 and 2025, respectively, accounting for a total of
The Company purchased its products from two and two
major vendors during the three months ended June 30, 2026 and 2025, respectively, accounting for a total of
Accounts payable to these major vendors were $
Advances made to these major vendors were as of June 30, 2026 and 2025, respectively.
Fair Value of Financial Instruments
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the condensed consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| ● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The carrying value of cash and cash equivalents, accounts receivable, other receivables, accounts payable, other payables and accrued liabilities approximate estimated fair values because of their short maturities.
The carrying amount of the borrowing approximates its fair values since it bears an interest rate which approximates market interest rate.
| 17 |
Foreign Currency Translation and Transactions
The accompanying consolidated financial statements are presented in United States Dollar (“$” or “USD”), which is also the functional currency of XMAX (Nova LifeStyle), Nova Furniture, Nova Samoa, Diamond Bar, I Design, Xmax Capital, Xmax Alpha Holdings Ltd, Xmax Beta Holdings Ltd, Xmax Delta Holdings Ltd and Xmax Sigma Holdings Ltd.
The Company’s subsidiaries with operations in Singapore and Malaysia use their local currency, the Singapore Doller (“SGD”) and Malaysian Ringgit (“RM”), as their functional currency. The entities’ functional currencies are the currency of the primary economic environment in which they operate, which are the currencies of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements.
Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are re-measured at the applicable rates of exchange in effect at that date. Gains and losses resulting from foreign currency re-measurement are included in the statements of operations.
The financial statements are presented in U.S. dollars. Assets and liabilities are translated into U.S. dollars at the current exchange rate in effect at the balance sheet date, and revenues and expenses are translated at the average of the exchange rates in effect during the reporting period. Stockholders’ equity accounts are translated using the historical exchange rates at the date the entry to stockholders’ equity was recorded, except for the change in retained earnings during the period, which is translated using the historical exchange rates used to translate each period’s income statement. Differences resulting from translating functional currencies to the reporting currency are recorded in accumulated other comprehensive income in the balance sheets.
Translation of amounts from RM into U.S. dollars has been made at the following exchange rates:
Schedule of Exchange Rates
| Balance sheet items, except for equity accounts | ||||
| June 30, 2026 | ||||
| December 31, 2025 | RM | |||
| Income Statement and cash flow items | ||||
| For the six months ended June 30, 2026 | ||||
| For the six months ended June 30, 2025 | RM |
Translation of amounts from SGD into U.S. dollars has been made at the following exchange rates:
| Balance sheet items, except for equity accounts | ||||
| June 30, 2026 | SGD | |||
| December 31, 2025 | ||||
| Income Statement and cash flow items | ||||
| For the six months ended June 30, 2026 | SDG | |||
| For the six months ended June 30, 2025 |
Segment Reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment.
In
accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in
deciding how to allocate resources and in assessing performance. The Company’s revenue segments have similar economic
characteristics and they are managed as a single business unit. The Company uses the “management approach” in
determining reportable operating segments. The management approach considers the internal organization and reporting used by the
Company’s chief operating decision maker for making operating decisions and assessing performance as the source for
determining the Company’s reportable segments. The Company’s CODM has been identified as the chief executive officer
(the “CEO”), who reviews consolidated results when making decisions about allocating resources and assessing performance
of the Company. Based on management’s assessment, the Company has determined that it has
| 18 |
All of the Company’s long-lived assets are mainly property, plant and equipment located in the United States.
Sales to customers by geographic area are determined by reference to the physical product shipment delivery locations requested by the customers. For example, if the products are delivered to a customer in the United States, the sales are recorded as generated in the United States; if the customer directs us to ship its products to China, the sales are recorded as sold in China. The Geographical Analysis is disclosed in Note 16.
The following tables present summary information by segment for the six months ended June 30, 2026 and 2025, respectively:
Schedule of Summary Information by Segment
| Sale of residential and commercial furniture | API-based service | Others | Total | |||||||||||||
| For the six months ended June 30, 2026 | ||||||||||||||||
| Sale of residential and commercial furniture | API-based service | Others | Total | |||||||||||||
| Sales | $ | $ | $ | |||||||||||||
| Cost of sales | ||||||||||||||||
| Operating expense | ||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Other (expense) income, net | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | |||||||||||
| Capital expenditure | $ | $ | $ | |||||||||||||
| Total reportable assets | $ | $ | $ | |||||||||||||
| Sale of residential and commercial furniture | API-based service | Others | Total | |||||||||||||
| For the six months ended June 30, 2025 | ||||||||||||||||
| Sale of residential and commercial furniture | API-based service | Others | Total | |||||||||||||
| Sales | $ | $ | $ | |||||||||||||
| Cost of sales | ||||||||||||||||
| Operating expense | ||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||||||||||
| Other expenses, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax benefit | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | |||||||||
| Capital expenditure | $ | $ | $ | |||||||||||||
| Total reportable assets | $ | $ | $ | |||||||||||||
The following tables present summary information by segment for the three months ended June 30, 2026 and 2025, respectively:
| Sale of residential and commercial furniture | API-based service | Others | Total | |||||||||||||
| For the three months ended June 30, 2026 | ||||||||||||||||
| Sale of residential and commercial furniture | API-based service | Others | Total | |||||||||||||
| Sales | $ | $ | $ | |||||||||||||
| Cost of sales | ||||||||||||||||
| Operating expense | ||||||||||||||||
| Income from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income, net | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | |||||||||||
| Capital expenditure | $ | $ | $ | |||||||||||||
| Total reportable assets | $ | $ | $ | |||||||||||||
| 19 |
| Sale of residential and commercial furniture | API-based service | Others | Total | |||||||||||||
| For the three months ended June 30, 2025 | ||||||||||||||||
| Sale of residential and commercial furniture | API-based service | Others | Total | |||||||||||||
| Sales | $ | $ | $ | |||||||||||||
| Cost of sales | ||||||||||||||||
| Operating expense | ||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||||||||||
| Other income, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense (benefit) | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | |||||||||
| Capital expenditure | $ | $ | $ | |||||||||||||
| Total reportable assets | $ | $ | $ | |||||||||||||
For the six and three months ended June 30, 2026 and 2025, and as of June 30, 2026 and 2025, substantial portion of the Company’s assets are located in the United States and substantial portion of the revenue was derived from customers located in the United States.
Leases
The Company determines if an arrangement is a lease or contains a lease at inception. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Company assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.
The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Company recognizes operating lease expenses on a straight-line basis over the lease term.
Right-of-use of assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. All right-of-use assets are reviewed for impairment annually. There was no impairment for right-of-use lease assets for the six months ended June 30, 2026 and December 31, 2025.
Lease liabilities
Lease liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the Company’s incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed lease payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee and any exercise price under a purchase option that the Company is reasonably certain to exercise. Lease liability is measured at amortized cost using the effective interest rate method. It is re-measured when there is a change in future lease payments, if there is a change in the estimate of the amount expected to be payable under a residual value
The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the consolidated balance sheets at June 30, 2026 and December 31, 2025.
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Convertible Note
The Company accounts for convertible notes in accordance with ASC 470-20, Debt with Conversion and Other Options. The notes are initially recorded at their principal amount, net of any applicable debt issuance costs. The Company evaluates the conversion features of its debt instruments to determine whether those features require bifurcation and separate accounting as derivatives.
For convertible notes issued with a conversion price that is fixed and where the conversion feature is considered clearly and closely related to the host contract, the instrument is accounted for as a single liability. Interest expense is recognized using the effective interest method over the term of the note. Upon conversion, the carrying value of the debt is reclassified to stockholders’ equity, and no gain or loss is recognized.
Accounts Payable and other payables
Accounts payable and other payables represent obligations to pay for goods or services that have been acquired in the ordinary course of business. These liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument, typically when legal title to goods passes or services are rendered.
Payables are initially measured at their transaction price, which represents the undiscounted amount of cash expected to be paid to satisfy the obligation. The Company classifies these as current liabilities unless the payment is not due within twelve months after the reporting period.
Other loan and borrowing cost
Other loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Subsequent to initial recognition, these interest-bearing obligations are measured at amortized cost using the effective interest method.
Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset are capitalized as part of the cost of that asset. All other borrowing costs are expensed in the period in which they are incurred. Debt issuance costs are presented in the balance sheet as a direct reduction from the carrying amount of the related debt liability and are amortized as interest expense over the term of the loan.
Contract liabilities
The Company accounts for contract liabilities under ASC 606, Revenue from Contracts with Customers. These amounts represent the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer.
Advances
are recorded as a contract liability at the time of receipt. The Company recognizes these advances as revenue when (or as) the Company
satisfies its performance obligations under the terms of the contract. The Company evaluates the timing of satisfaction (point-in-time
vs. over-time) based on the transfer of control to the customer. The Company’s contract liabilities amounted to $
Reclassification
Certain prior period accounts have been reclassified in conformity with current period’s presentation.
New Accounting Pronouncements
Recently Adopted Accounting Standards
In March 2025, the FASB issued ASU 2025-02—Liabilities (405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. The amendments in this Update are effective immediately and on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company adopted the ASU in 2025. The adoption did not have a material impact on the financial statements.
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On July 4, 2025, the U.S. H.R.1, an act to provide for reconciliation pursuant to title II of H. Con. Res. 14. (the “OBBBA”) was enacted. The OBBBA introduces multiple tax law and other legislative changes, including modifications to income tax provisions such as domestic research and development expenses, capital expenditures, and U.S. taxation of international earnings; the repeal or acceleration of the sunset of certain tax credits under the 2022 Inflation Reduction Act and elimination of certain penalties for violations of certain regulatory credit programs. We have recognized the effects of the OBBBA provisions in our financial results to the extent they are applicable to the three months ended June 30, 2026. We will continue to evaluate the impact of these provisions on our 2026 and subsequent consolidated financial statements, including loss of certain regulatory credit sales tied to our products and changes to the costs of our products.
In March 2023, the FASB issued ASU 2023-01, Lease (Topic 842): Common Control Arrangements, which clarifies the accounting for leasehold improvements associated with leases between entities under common control (hereinafter referred to as common control lease). ASU 2023-01 requires entities to amortize leasehold improvements associated with common control lease over the useful life to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset through a lease, and to account for any remaining leasehold improvements as a transfer between entities under common control through an adjustment to equity when the lessee no longer controls the underlying asset. This ASU will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. An entity may apply ASU 2023-01 either prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of ASU 2023-01 will have on our unaudited condensed consolidated financial statement presentations and disclosures.
In December 2023, the FASB issued Accounting Standards Update No.2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation,(2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3)income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual period beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its unaudited condensed consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient and, if applicable, an accounting policy election to simplify the measurement of credit losses for certain receivables and contract assets. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in any interim or annual period in which financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.
Recently Issued But Not Yet Adopted Accounting Pronouncements
On November 4, 2024, the FASB issued an ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”) to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions (such as cost of sales; selling, general, and administrative expenses; and research and development). The amendments in the ASU require disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same tabular disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. In January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments, as clarified by ASU 2025-01, are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statement presentation or disclosures.
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In January 2025, the FASB issued ASU 2025-01 Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather than in annual reporting period. The FASB’s intent in the basis for conclusions of ASU 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquirer in the Acquisition of a Variable Interest Entity. The amendments provide guidance on identifying the accounting acquirer in transactions involving a variable interest entity. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting period within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.
In May 2025, the FASB issued ASU 2025-04, Compensation - Stock Compensation (Topic 18) and Revenue from contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. The amendments provide guidance on identifying the accounting acquirer in transactions involving a variable interest entity. The amendments clarify the accounting for share-based consideration payable to a customer under Topic 718 and Topic 606. The amendments are effective for annual reporting periods, including interim reporting period within those annual periods, beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date; or follow a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption; or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The ASU establishes authoritative guidance in GAAP about accounting for government grants received by business entities, clarifies the appropriate accounting, in an effort to reduce diversity in practice, and increase consistency of application across business entities. The ASU is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Adoption of this ASU can be applied a modified prospective approach, a modified retrospective approach, or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied either a prospective or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
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In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In April 2026, the FASB issued ASU 2026-01—Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The amendments in this Update clarify the initial measurement of paid-in-kind dividends on preferred stock that is classified within equity. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in any interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. An entity adopting the amendments in an interim reporting period should apply them as of the beginning of the annual reporting period that includes that interim reporting period. The Company is currently evaluating the impact that the adoption of ASU 2026-01 will have on its consolidated financial statement presentation or disclosures.
The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.
Note 3 - Inventories
The
inventories as of June 30, 2026 and December 31, 2025 totaled $
Inventories
are stated at the lower of cost and net realizable value, with cost determined on a weighted-average basis. Write-down of potential obsolete
or slow-moving inventories is recorded based on management’s assumptions about future demands and market conditions. For the six
months ended June 30, 2026 and 2025, the Company wrote-down (reversed) $
Note 4 – Deposits to Others
On
April 6, 2026, XMax AI Inc. entered into a one-year term of cloud service contract with a service providing company to using its AWS products and cloud
service provided by AWS. The contract was effective from June 3, 2026 to June 2, 2027. During the six and three months ended June 30,
2026, the Company made $
On April 22, 2026, XMax AI Inc. entered into a cloud service agreement for
AWS-based cloud computing and AI model API access with a service providing company. The contract was effective from April 22, 2026. Prior to service
activation, the Company paid a refundable performance deposit of $
On
June 11, 2026, XMax AI Inc. entered into a one-year term of cloud service contract with a service providing company to using its AWS products and cloud
service provided by AWS. The contract was effective from June 1, 2026 to May 31, 2027. The Company recorded $
On
June 24, 2026,
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Note 5 – Plant, property and Equipment, Net
As of June 30, 2026 and 2025, Plant, property and equipment consisted of the following:
Schedule of Plant, Property and Equipment
As of June 30, 2026 | As of December 31, 2025 | |||||||
| Computer and office equipment | $ | $ | ||||||
| Decoration and renovation | ||||||||
| Property plant and equipment gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property plant and equipment net | $ | $ | ||||||
On
October 1, 2025, Nova Malaysia abandoned its entire fixed assets of
On
June 23, 2026, the Company acquired computers for $
Depreciation
expense was $
Note 6 – Intangible Assets
As of June 30, 2026 and December 31, 2025, intangible assets consisted of the following:
Schedule of Intangible Assets
As of June 30, 2026 | As of December 31, 2025 | |||||||
| Accounting software | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization
expense was and $
Note 7 – Investment in Fund
On
September 25, 2025, Nova Furniture Limited (the “Nova BVI”), a company incorporated in the British Virgin Islands and a wholly
owned subsidiary of XMax Inc. entered into a Subscription Agreement (the “Agreement”) with Preamble Capital, A Series of
CGF2021 LLC (the “Fund”), a Delaware Limited Liability Company. Pursuant to the Agreement, Nova BVI subscribes
On
September 25, 2025, Nova BVI closed its subscription of
On
September 26, 2025, Preamble Capital entered into a Subscription Agreement (the “Subscription Agreement”) with a certain
fund that holds an aggregate of shares of Common Stock of SpaceX, comprising of shares of Class A Common Stock and
shares of Class C Common Stock of Space X. Pursuant to the Subscription Agreement, Preamble Capital subscribed approximately
On
October 15, 2025, XMax Alpha Holdings Ltd. (the “Company”), a company incorporated in the Cayman Islands and an indirectly
wholly owned subsidiary of XMax Inc. entered into a Subscription Agreement (the “Agreement”) with Preamble Capital I, A Series
of CGF2021 LLC (the “Fund”), a Delaware Limited Liability Company. Pursuant to the Agreement, the Company subscribed
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On
October 16, 2025, the Fund entered into a Subscription Agreement with a certain fund to subscribe certain interest of such fund for an
amount of $
On
December 2, 2025, Xmax Beta Holdings Ltd. (the “Xmax Beta”), a company incorporated in the Cayman Islands and an indirectly
wholly owned subsidiary of XMax Inc. entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a
series of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Beta subscribed approximately
On
December 2, 2025, Preamble X Capital I entered into a Subscription Agreement with a dedicated SPV (the “SPV”) to subscribe
equity certificates in the SPV for an amount of US$
On
December 8, 2025, Preamble X Capital I entered into a separate Subscription Agreement with a separate fund to subscribe certain interest
of such fund for an amount of $
On
December 16, 2025, Xmax Beta entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series
of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Beta made an additional subscription
in an aggregate amount of US$
Allocations
Fund Administration, LLC is the administrative manager of Preamble X Capital I. The applicable management fee percentage for Xmax Beta
is
On
December 18, 2025, Preamble X Capital I entered into a Subscription Agreement with a certain fund to subscribe certain interest of such
fund for an amount of $
On
December 2, 2025, Preamble X Capital I, a series of Preamble X Capital LLC entered into a Subscription Agreement with a dedicated SPV
(the “SPV”) to subscribe equity certificates in the SPV for an amount of US$
On
February 4, 2026, Xmax Beta entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series of
Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Beta made additional subscription in an
aggregate amount of US$
On
February 4, 2026, Preamble X Capital I entered into a Subscription Agreement with a dedicated SPV (the “SPV”) to subscribe
equity certificates in the SPV for an amount of US$
On
April 15, 2026, Xmax Beta Holdings Ltd. (the “Xmax Beta”), a company incorporated in the Cayman Islands and an indirectly
wholly owned subsidiary of XMax Inc. entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a
series of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Beta made additional subscription
in an aggregate amount of US$
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On
April 17, 2026, Preamble X Capital I entered into a Subscription Agreement with a private investment fund (the “Fund”). Pursuant
to the Agreement, Preamble X Capital I subscribed for approximately a
In
making these estimates, the company utilized valuation methods based on information available, including the most current purchasing
prices and observable transactions such as new offerings. For the six and three months ended June 30, 2026, A unrealized gain of
approximately $
As
of June 30, 2026 and December 31, 2025, these funds measured at fair value were $
Note 8 – Advance to Suppliers
The
Company makes advances to certain vendors for inventory purchases. The advances on inventory purchases were $
Note 9 – Prepaid Expenses and Other Receivables
Prepaid expenses and other receivables consisted of the following as of June 30, 2026 and December 31, 2025:
Schedule of Prepaid Expenses and Other Receivable
As of June 30, 2026 | As of December 31, 2025 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Other receivables | ||||||||
| Prepaid expenses and other receivables | $ | $ | ||||||
As of June 30, 2026 and December 31, 2025, prepaid expenses and other receivables mainly represented prepaid insurance, prepaid rent, refund receivable from suppliers, prepaid advertising expense, prepayment to API service and Celero and Cardknox account balances.
| 27 |
Note 10 – Loan to Third Party
On
January 28, 2026, the Company entered into a loan agreement with a company incorporated in Hong Kong. Pursuant to the Loan Agreement,
the Company agreed to provide the borrower with a loan in an aggregate principal amount of $
Note 11 – Accrued Liabilities and Other Payables
Accrued liabilities and other payables consisted of the following as of June 30, 2026 and December 31, 2025:
Schedule of Accrued Liabilities and Other Payables
As of June 30, 2026 | As of December 31, 2025 | |||||||
| Other payables | $ | $ | ||||||
| Payable to API-based service providers | ||||||||
| Salary payable | ||||||||
| Financed insurance premiums | ||||||||
| Auditing fee | ||||||||
| Warranty liability | ||||||||
| Accrued commission | ||||||||
| Accrued expenses, others | ||||||||
| Total accrued liabilities and other payable | $ | $ | ||||||
As of June 30, 2026 and December 31, 2025, other accrued expenses mainly included legal and professional fees and utilities. Other payables represented balance on credit card, other taxes payable, 401(k) payable and payable for marketing, shipping, director and showroom.
On
September 12, 2023, Nova Malaysia entered into an agreement with a consulting firm to deliver consultancy service for AI Trends and Tools.
Nova Malaysia agreed to pay
Note 12 – Other Loan
On
June 19, 2020, Diamond Bar was granted a U.S. Small Business Administration (SBA) loan in the aggregate amount of $
On
November 14, 2024, Nova Malaysia entered into a loan agreement in the aggregate amount of $
Note 13 – Convertible Notes
On
November 18, 2025, the Company entered into a Convertible Promissory Note Purchase Agreement (the “Agreement”) with Billiongold
Holding Limited, a company incorporated under the law of Hong Kong (the “Purchaser”). Pursuant to the Agreement, the Company
sold a Convertible Promissory Note to the Purchaser with a principal amount of $
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Note 14 – Related Party Transactions
On
September 30, 2011, Diamond Bar leased a showroom in High Point, North Carolina from the Company’s former President, Chief
Executive Officer and Chairperson of the Board (resigned during 2025). The lease is renewable and has been renewed each year since
2011. On April 1, 2025, the Company renewed the lease for an additional
On
January 4, 2018, the Company entered into a sales representative agreement with a consulting firm, which is owned by the former President,
Chief Executive Officer and Chairperson of the Board, for sales representative service for a term of
In
February 2024, the Company entered into a loan agreement in the aggregate amount of $
On
April 11, 2024, the Company entered into a loan agreement in the aggregate amount of $
On
April 11, 2025, the Company entered into a loan agreement in the aggregate amount of $
Note 15 – Stockholders’ Equity
On May 28, 2021, the Company’s stockholders approved the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) at its annual shareholders’ meeting. The 2021 Plan was approved by the Board of Directors of the Company on April 12, 2021 and has a total of shares of the Company’s common stock which may be granted as stock reward to attract and retain personnel, provide additional incentives to employees, directors and consultants and promote the success of the Company’s business. On June 16, 2021, the Company filed Form S-8 to register the shares of the Company’s common stock under the 2021 Plan.
On August 31, 2023, the Company’s stockholders approved the Company’s 2023 Equity Incentive Plan (the “2023 Plan”) at its special shareholders’ meeting. The 2023 Plan was approved by the Board of Directors of the Company on June 28, 2023 and has a total of shares of the Company’s common stock which may be granted as stock reward to attract and retain personnel, provide additional incentives to employees, directors and consultants and promote the success of the Company’s business. On December 15, 2023, the Company filed Form S-8 to register the shares of the Company’s common stock under the 2023 Plan.
On May 31, 2024, the Company’s stockholders approved the Company’s 2024 Equity Incentive Plan (the “2024 Plan”) at its annual shareholders’ meeting. The 2024 Plan was approved by the Board of Directors of the Company on April 19, 2024 and has a total of shares of the Company’s common stock which may be granted as stock reward to attract and retain personnel, provide additional incentives to employees, directors and consultants and promote the success of the Company’s business.
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The NASDAQ notification letter provides the Company until June 6, 2024 to submit a plan to regain compliance.
The Company submitted its plan of compliance on May 28, 2024 and a supplemental letter to the plan of compliance on June 20, 2024. On June 27, 2024, the Company received a notification letter from NASDAQ Listing Qualification Staff (“Staff”). Based on the review of the letters submitted by the Company, Staff has determined to grant the Company an extension until October 14, 2024 to regain compliance with the Rule and the Company must complete its initiatives and provide evidences for the compliance with the Rule as required by NASDAQ.
The
Company and Nova Samoa have entered into orders to purchase inventories in total amount of $
Based on the Form 8-K, staff of NASDAQ (“Staff”) has determined that the Company complies with the Listing Rule 5550(b)(1). However, as noted in its letter dated, June 27, 2024, if the Company fails to evidence compliance upon filing its next periodic report covering the period of the Transaction which is the annual report for the year ended December 31, 2024 (“2024 Form 10-K”), it may be subject to delisting. At that time, Staff will provide written notification to the Company, which may then appeal Staff’s determination to a Hearings Panel. The Company filed its 2024 Form 10-K on March 31, 2025 and has not received any written notification from Nasdaq as of the day of this report.
On
May 16, 2024, the Company entered into a Securities Purchase Agreement with an investor to sell shares of the Company’s
common stock at a purchase price of $ per share for an aggregate price of $
On
July 30, 2024, the Company entered into a Securities Purchase Agreement with the same investor to sell shares of the Company’s
common stock at a purchase price of $ per share for an aggregate price of $
On
October 11, 2024, the Company and Nova Samoa entered into five purchase orders (“POs”) to purchase certain furniture products
(the “Products”) from Iconic Tech SDN BHD (“Iconic Tech”), Onefull Technologies SDN. BHD. (“Onefull Technologies”),
Skyvip SDH BHD (“Skyvip”), United Poles SDH BHD (“United Poles”) and Teclutions System SDN. BHD (“Teclutions”,
collectively with Iconic Tech, Onefull Technologies, Skyvip and United Poles as the Sellers). Pursuant to the POs, the Company, Nova
Samoa and Sellers agree that (i) Nova Samoa will purchase Background Light Slabs from Iconic Tech for a total of $
| 30 |
On
October 25, 2024, the Company entered into a Securities Purchase Agreement (the “Agreement”) with certain purchaser identified
on the signature page thereto (the “Purchaser”), pursuant to which the Company agreed to sell to the Purchaser in a private
placement shares (the “Shares”) of the Company’s common stock, par value $ per share (the “Common
Stock”), at a purchase price of $ per share for an aggregate price of $
On
January 6, 2025, the Company entered into a Securities Purchase Agreement (the “Agreement”) with certain purchaser identified
on the signature page thereto (the “Purchaser”), pursuant to which the Company agreed to sell to the Purchaser in a private
placement shares (the “Shares”) of the Company’s common stock, par value $ per share (the “Common
Stock”), at a purchase price of $ per share for an aggregate price of $
On
February 10, 2025, the Company entered into a Securities Purchase Agreement (the “Agreement”) with certain purchaser identified
on the signature page thereto (the “Purchaser”), pursuant to which the Company agreed to sell to the Purchaser in a private
placement shares (the “Shares”) of the Company’s common stock, par value $ per share (the “Common
Stock”), at a purchase price of $ per share for an aggregate price of $
On
February 20, 2025, the Company entered into a Debt Repayment Agreement (the “Agreement”) with Huge Energy International Limited,
a company incorporated in Hong Kong and a creditor of the Company (the “Creditor”), pursuant to which the Company agreed
to repay $
On
February 26, 2025, the Company and Nova Samoa entered into four purchase orders (“POs”) to purchase certain furniture products
(the “Products”) from Flyguy Resources Sdn Bhd (“Flyguy Resources”), Twenty Nine Business Solutions Sdn Bhd.
(“Twenty Nine Business”), Chialing Enterprise (“Chialing”) and Macro IT Solutions SDH BHD (“Macro IT Solutions”,
collectively with Flyguy Resources, Twenty Nine Business, and Chialing as the “Sellers”). Pursuant to the POs, the Company,
Nova Samoa and Sellers agree that (i) Nova Samoa will purchase Transparent Marble Slabs from Flyguy Resources for a total of $
On
March 13, 2025, the Company entered into a Securities Purchase Agreement (the “Agreement”) with certain purchaser identified
on the signature page thereto (the “Purchaser”), pursuant to which the Company agreed to sell to the Purchaser in a private
placement shares (the “Shares”) of the Company’s common stock, par value $ per share (the “Common
Stock”), at a purchase price of $ per share for an aggregate price of $
On September 4, 2025, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with purchasers named therein (each, a “Purchaser” and collectively the “Purchasers”), pursuant to which the Company agreed to sell, in a best-efforts public offering, an aggregate of (i) shares (the “Shares”) of the Company’s common stock, par value $ (“Common Stock”) and (ii) warrants to purchase shares of Common Stock (the “Warrants” and such shares of Common Stock issuable upon exercise of the Warrants, the “Warrant Shares”). Each share of Common Stock is being sold together with two Warrants, with each Warrant to purchase one share of Common Stock. The combined purchase price per Share and accompanying Warrants is $.
| 31 |
The
Warrants are exercisable at an exercise price of $
On
September 4, 2025, the Company closed the public offering of these securities for gross proceeds of approximately $
American
Trust Investment Services, Inc. (“ATIS”) acted as the exclusive placement agent for the Offering pursuant to the Placement
Agency Agreement, dated September 3, 2025. As compensation for such placement agent services, the Company paid ATIS an aggregate cash
fee equal to
The
warrants issued in the public offering described above are exercisable for a fixed number of shares, and are classified as equity instruments
under ASC 815-40-25-10. The Company accounted for the warrants issued in the public offering based on the fair value method under ASC
Topic 505, and the fair value of the warrants was calculated using the Black-Scholes model under the following assumptions: estimated
life of years, volatility of %, risk-free interest rate of % and dividend yield of %. No estimate of forfeitures was made
as the Company has a short history of granting options and warrants. The fair value of the warrants issued to investors and placement
agent at grant date was $
On
October 13, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers
identified on the signature pages thereto (the “Purchasers”), pursuant to which the Company will sell to the Purchasers in
a registered direct offering, an aggregate of shares (the “Shares”) of its common stock, par value $ per share
(“Common Stock”) at a purchase price of $ per share, for aggregate gross proceeds to the Company of $
On
December 19, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with two purchasers,
an individual and resident of Hong Kong and an individual and resident of China (the “Purchasers”), pursuant to which the
Company sold to the Purchasers in a registered direct offering, an aggregate of shares (the “Shares”) of its common
stock, par value $ per share (“Common Stock”) at a purchase price of $ per share, for aggregate gross proceeds to
the Company of $
On
March 9, 2026, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers
identified on the signature pages thereto (the “Purchasers”), pursuant to which the Company will sell to the Purchasers in
a registered direct offering, an aggregate of shares (the “Shares”) of its common stock, par value $ per share
(“Common Stock”) at a purchase price of $ per share, for aggregate gross proceeds to the Company of $
The Shares are being offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3 previously filed with the U.S. Securities and Exchange Commission on October 13, 2023 and declared effective on October 23, 2023 (File No. 333-274970) (the “Registration Statement”).
On
March 30, 2026, the Company entered into a Securities Purchase Agreement (the “Agreement”) with StratoCore Solutions Ltd.,
a Malaysian company (the “Purchaser”), pursuant to which the Company agreed to sell to the Purchaser in a private placement
shares (the “Shares”) of the Company’s common stock, par value $ per share (the “Common Stock”),
at a purchase price of $ per share for an aggregate offering price of $
On
April 13, 2026, the Company entered into Securities Purchase Agreements (the “Agreements”) with twenty two non-U.S. person
investors, namely Chen Yingjie, Fang Chongyi, Jiang Yan, Ma Ying, Ren Guangfei, Ren Tao, Shen Xiaoyan, Song Rongrong, Tan Kaichang, Tang
Min, Wang Haifeng, Wang Jinhua, Wang Li, Wang Zecui, Wei Huifen, Yao Jing, Yu Suying, Zeng Qingyu, Zhang Bingli, Zhang Ciqiang, Zhao
Xianxian and Zhao Zheyao (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers in a private
placement for a total of shares (the “Shares”) of the Company’s common stock, par value $ per share (the
“Common Stock”), at a purchase price of $ per share for an aggregate offering price of $
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On
April 24, 2026, the Company entered into Securities Purchase Agreements (the “Agreements”) with six non-U.S. investors (the
“Purchasers”), pursuant to which the Company agreed to sell to the Purchasers in a private placement for a total of
shares (the “Shares”) of the Company’s common stock, par value $ per share (the “Common Stock”), at
a purchase price of $ per share for an aggregate offering price of $
On
May 28, 2026, XMax Inc. (the “Company”) entered into Securities Purchase Agreements (the “Agreements”) with certain
non-U.S. investors identified on the signature pages thereto (the “Purchasers”), pursuant to which the Company agreed to
sell to the Purchasers in a private placement for a total of
shares (the “Shares”) of the Company’s common
stock, par value $
per share (the “Common Stock”), at a purchase price
of $
per share for an aggregate offering price of $
Shares and Warrants issued through Private Placement
On
July 23, 2021, the Company conducted a registered direct offering of shares of common stock. The shares were offered and sold
by the Company pursuant to an effective shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission
(the “SEC”) on October 8, 2020 and subsequently declared effective on October 15, 2020. Additionally, the Company issued
to the investors unregistered warrants to purchase up to an aggregate of
In
conjunction with this offering, the Company issued warrants to purchase
The
warrants issued in the private placement described above are exercisable for a fixed number of shares, and are classified as equity instruments
under ASC 815-40-25-10. The Company accounted for the warrants issued in the private placement based on the fair value method under ASC
Topic 505, and the fair value of the warrants was calculated using the Black-Scholes model under the following assumptions: estimated
life of years, volatility of %, risk-free interest rate of % and dividend yield of %. No estimate of forfeitures was made
as the Company has a short history of granting options and warrants. The fair value of the warrants issued to investors and placement
agent at grant date was $
Warrants
The following is a summary of the warrant activity for the six months ended June 30, 2026:
Summary of Warrant Activity
| Number of Warrants | Average Exercise Price | Weighted Average Remaining Contractual Term in Years | ||||||||||
| Outstanding at January 1, 2026 | $ | |||||||||||
| Exercisable at January 1, 2026 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised / surrendered | - | |||||||||||
| Expired | - | |||||||||||
| Outstanding at June 30, 2026 | $ | |||||||||||
| Exercisable at June 30, 2026 | $ | |||||||||||
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Shares Issued to Consultants
On
March 1, 2024, Nova Malaysia entered into a consulting agreement with a consultant for IT system related maintenance and services effective
on March 1, 2024 for a one-year
On
September 3, 2024, Nova Malaysia entered into a consulting agreement with a consultant for IT system related maintenance and services
effective on September 1, 2024 for a one-year
On
September 3, 2024, Nova Malaysia entered into a consulting agreement with a consultant for IT system related maintenance and services
effective on September 1, 2024 for a one-year
On
November 7, 2024, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on
November 16, 2024 for a one-year
Shares Issued to Employees
On
November 7, 2024, the Company extended an employment agreement with the Company’s Corporate Secretary for a term of one year effective
from November 14, 2024. The Company agreed to grant an award of restricted Stock Units to the officer pursuant to the Company’s
2023 Omnibus Equity Plan. The fair value of these shares was $
As of June 30, 2026, unrecognized share-based compensation expense was $.
Note 16 – Geographical Analysis
Geographical distribution of sales consisted of the following for the six and three months ended June 30, 2026 and 2025:
Schedule of Revenue by Geographic Areas
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Geographical Areas | ||||||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||
| Other countries | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
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Geographical location of identifiable long-lived assets as of June 30, 2026 and 2025:
Schedule of Long-lived Assets by Geographic Areas
| 2026 | 2025 | |||||||
| Geographical Areas | ||||||||
| North America | $ | $ | ||||||
| Asia | ||||||||
| Total | $ | $ | ||||||
Note 17 – Lease
On
June 17, 2013, the Company entered into a lease agreement for office, warehouse, storage, and distribution space in the United States
with a
The Company has entered into several lease agreements for office and warehouse space in Commerce, California and showroom space in Las Vegas, Nevada and High Point, North Carolina (see Note 14) on monthly or annual terms.
On
July 15, 2019, Nova Malaysia entered into a sublease agreement for warehouse space with a two
On
October 29, 2019, Nova Malaysia entered into a lease agreement for a showroom with a two
On
August 20, 2020, Nova Malaysia entered into a sublease agreement for an office and service center with a two
On
August 31, 2022, the Company entered into an auto lease agreement with an unrelated auto dealership with a three
On
November 8, 2024, the Company entered into an auto lease agreement with an unrelated auto dealership with a three
On
December 9, 2024, Nova Malaysia entered into an agreement for a warehouse with a two
On
July 1, 2025, the Company, as a sublessor, entered into a warehouse space sublease agreement with an unrelated third party with a three
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Operating lease expense for the six months ended June 30, 2026 and 2025 was as follows:
Schedule of Lease Cost
| 2026 | 2025 | |||||||
| Operating lease cost – straight line | $ | $ | ||||||
The following is a schedule, by years, of maturities of operating lease liabilities as of June 30, 2026:
Schedule of Operating Lease Liability Maturity
| Operating Leases | ||||
| 2026 | $ | |||
| Thereafter | ||||
| Total undiscounted cash flows | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
Lease Term and Discount Rate
Schedule of Lease Term and Discount Rate
| June 30, 2026 | ||||
| Weighted-average remaining lease term – years | ||||
| Operating leases – USA | ||||
| Weighted-average discount rate (%) | ||||
| Operating leases – USA | ||||
Supplemental cash flow information related to leases where the Company was the lessee for the six months ended June 30, 2026 and 2025 was as follows:
Schedule of Supplemental Cash Flow Information Related to Leases
| 2026 | 2025 | |||||||
| Operating cash outflows from operating leases | $ | $ | ||||||
Finance lease expense for the six and three months ended June 30, 2026 and 2025 was as follows:
Schedule of Finance Lease Expenses
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Finance lease cost – straight line | $ | $ | $ | $ | ||||||||||||
The following is a schedule, by years, of maturities of finance lease liabilities as of June 30:
Schedule of Finance Lease Liabilities
| Finance Leases | ||||
| 2026 | $ | |||
| 2027 | ||||
| Thereafter | ||||
| Total undiscounted cash flows | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Less: Finance lease liabilities - current | ||||
| Finance lease liabilities - non-current | ||||
| 36 |
Lease Term and Discount Rate
Schedule of Finance Lease Term and Discount Rate
| June 30, 2026 | ||||
| Weighted-average remaining lease term – years | ||||
| Finance leases – USA | ||||
| Weighted-average discount rate (%) | ||||
| Finance leases – USA | ||||
Supplemental cash flow information related to leases where the Company was the lessee for the six months ended June 30, 2026 and 2025 was as follows:
Schedule of Supplemental Finance Cash Flow Information Related to Leases
| 2026 | 2025 | |||||||
| Operating cash outflows from finance leases | $ | $ | ||||||
Note 18 – Commitments and Contingencies
Legal proceedings
From time to time, the Company may be involved in various legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition, operating results, or cash flows.
Note 19 – Subsequent Events
The Company has evaluated subsequent events through August 14, 2026, the date of the issuance of the unaudited condensed consolidated financial statements, and identified the following material subsequent event.
On
July 1, 2026, XMax Inc. (the “Company”) entered into Securities Purchase Agreements (the “Agreements”) with certain
non-U.S. investors identified on the signature pages thereto (the “Purchasers”), pursuant to which the Company agreed to
sell to the Purchasers in a private placement for a total of
shares (the “Shares”) of the Company’s common
stock, par value $
per share (the “Common Stock”), at a purchase price
of $
per share for an aggregate offering price of $
On
July 6, 2026, Xmax Beta Holdings Ltd. (the “Company”), a company incorporated in the Cayman Islands and an indirectly wholly
owned subsidiary of XMax Inc. entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series
of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, the Company made additional subscription
in an aggregate amount of US$
On
July 17, 2026, Xmax Beta Holdings Ltd. (the “Company”), a company incorporated in the Cayman Islands and an indirectly wholly
owned subsidiary of XMax Inc. entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series
of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, the Company made additional subscription
in an aggregate amount of US$
On
July 17, 2026, Preamble X Capital I entered into a Subscription Agreement with a private investment fund (the “Fund”). Pursuant
to the agreement, Preamble X Capital I subscribed for approximately
Xmax Beta Holdings Ltd.,
a company incorporated in the Cayman Islands and an indirectly wholly owned subsidiary of XMax Inc. previously contributed an aggregate
amount of US$
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CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” the negatives of such terms and other terms of similar meaning typically identify forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those listed under the heading “Risk Factors” and those listed in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10K”). The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report and in our 2025 Form 10-K. Unless the context otherwise requires, references in this report to “we,” “us,” “XMax” “Nova Lifestyle” or the “Company” refer to XMax Inc. and its subsidiaries.
| 38 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Safe Harbor Declaration
The following discussion and analysis are based upon our financial statements as of the dates and for the periods presented in this section. You should read this discussion and analysis in conjunction with the financial statements and notes thereto found in Part I, Item 1 of this Form 10-Q and our consolidated financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Form 10-K”). All references to the second quarter and first six months of 2026 and 2025 mean the three-month periods ended June 30, 2026 and 2025. In addition to historical information, the following discussion and other parts of this report contain certain forward-looking information. When used in this discussion, the words, “believes,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from projected results, due to a number of risks, uncertainties and factors beyond our control. We do not undertake to publicly update or revise any of these forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Readers also are urged to carefully review and consider our discussions regarding the various factors that affect the company’s business, which are described in this section and elsewhere in this report. For more information, see our discussion of risk factors located at Part I, Item 1A of our 2025 Form 10-K.
Overview
XMax Inc. (the “Company”), formerly known as Nova LifeStyle, Inc., is a distributor of contemporary styled residential and commercial furniture incorporated into a dynamic marketing and sales platform offering retail as well as online selection and global purchase fulfillment. We monitor popular trends and products to create design elements that are then integrated into our product lines that can be used as both stand-alone or whole-room and home furnishing solutions. Through its network of retailers, e-commerce platforms, stagers and hospitality providers, the Company also sells (through an exclusive third-party manufacturing partner) a managed variety of high quality bedding foundation components. The Company has also expanded its business into the development of artificial intelligence technologies, including AI software and platform-based services to support future growth.
The Company’s brand family currently includes XMAX, XMAX AI, Nova LifeStyle, Diamond Sofa (www.diamondsofa.com) and Nova Living.
Our customers for furniture business principally consist of distributors and retailers with specific geographic territories that deploy middle to high end private label home furnishings which have very little competitive overlap with our specific furnishing products or product lines. We are constantly seeking to integrate new sources of distribution and manufacturing that are properly aligned with our growth strategy. This allows us to continually focus on building both our overall distribution and manufacturing relationships through a deployment of popular, as well as trend-based, furnishing solutions worldwide.
Our newly developed AI software and platform-based services are to provide our customers access to XMax’s artificial intelligence models through API-based (Application Programming Interface) services. These services are provided via our recently deployed AI platform, enabling the customer to integrate, distribute, and commercialize these capabilities globally under its own branding. Our platform supports high availability and scalable deployment, enabling customers to efficiently integrate advanced AI capabilities into their commercial applications.
We are a U.S. holding company with no material assets in the U.S. other than the ownership interests of our wholly owned subsidiaries through which we market, design and sell residential and commercial furniture and provide AI software and platform-based services. Our subsidiaries include Nova Furniture Limited domiciled in the British Virgin Islands (“Nova Furniture”), Nova Furniture Ltd. domiciled in Samoa (“Nova Samoa”), Diamond Bar Outdoors, Inc. domiciled in California (“Diamond Bar”), Nova Living (M) SDN. BHD. domiciled in Malaysia (“Nova Malaysia”), Nova Living (HK) Group Limited domiciled in Hong Kong (“Nova HK”). We also have a wholly owned subsidiaries Xmax AI Inc. incorporated in Nevada and its wholly owned subsidiary Elonx AI Holdings PTE. LTD. domiciled in Singapore (“Elonx AI”), and Xmax Capital Ltd. domiciled in Samoa and its wholly owned subsidiaries Xmax Alpha Holdings Ltd. (the “Xmax Alpha”), Xmax Beta Holdings Ltd., Xmax Delta Holdings Ltd. and Xmax Sigma Holdings Ltd., all domiciled in the Cayman Islands. The Company had three former subsidiaries Bright Swallow International Group Limited domiciled in Hong Kong (“Bright Swallow” or “BSI”) which was sold in January 2020, and Nova Furniture Macao Commercial Offshore Limited domiciled in Macao (“Nova Macao”) which was de-registration and liquidation in January 2021. In February 2022, Nova HK entered a de-registration process and transferred all its assets and business to Nova Malaysia. The process of de-registration and liquidation of Nova HK was completed in February 2023.
| 39 |
On December 12, 2019, we became the sole shareholder of Nova Living (M) SDN. BHD. (“Nova Malaysia”), a company incorporated on July 26, 2019 under the laws of Malaysia. Nova Malaysia marketed and sold high-end physiotherapeutic jade mats for use in therapy clinics, hospitality, and real estate projects in Malaysia and other regions in Southeast Asia. Due to the negative impact caused by COVID-19, we eventually sold the entire jade mats inventory in liquidation sales in June 2023 and existed from Jade Mats business.
On November 5, 2020, we acquired Nova Living (HK) Group Limited (“Nova HK”) at cost of $1,290 which was incorporated in Hong Kong on November 6, 2019. Nova HK took over Nova Macao’s business upon its deregistration, however, it had minimum operations in 2021. In February 2022, Nova HK entered a de-registration process and transferred all its assets and business to Nova Malaysia. The process of de-registration and liquidation of Nova HK was completed in February 2023.
Our experience developing and marketing products for international markets has enabled us to develop the scale, logistics, marketing, manufacturing efficiencies and design expertise that serve as the foundation for us to expand aggressively into the highly attractive U.S., Canada, South America, Asia and Middle Easter markets.
We do not have access to a revolving credit facility. On May 4, 2020, the Company received loan proceeds in the amount of approximately $139,802 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. On May 5, 2020, Diamond Bar Outdoors Inc. (“Diamond Bar”) was granted a loan from Cathay Bank in the aggregate amount of $176,294, pursuant to the Paycheck Protection Program. On June 19, 2020, Diamond Bar was granted a U.S. Small Business Administration (SBA) loan in the aggregate amount of $150,000, pursuant to the Economic Injury Disaster Loan. During the fiscal year of 2025, the Company completed three private placements for gross proceeds of $500,000, a public offering for proceeds of $9 million, two registered direct offerings for approximately $19 million and a convertible note financing for $5 million. The Company also repaid $217,000 debt with its shares of common stock, $6,503 to director and $3,441 to SBA loan for the year ended December 31, 2025. During the first quarter of 2026, the Company also made one registered direct offering for approximately $36 million and one private placement for approximately $7 million. During the second quarter of 2026, the Company made three private placements for approximately $37.6 million. We currently believe that our financial resources will be adequate to finance our operations in the next 12 months. However, in the event that we do need to raise capital in the future, the instability in the securities markets could adversely affect our ability to raise additional capital.
On September 25, 2025, Nova BVI entered into a Subscription Agreement (the “Agreement”) with Preamble Capital, A Series of CGF2021 LLC (the “Fund”), a Delaware Limited Liability Company. Pursuant to the Agreement, Nova BVI subscribes 99.82% interest in the Fund in an amount equal to $5,664,500. (the “Subscription Amount”) and will become a member of the Fund and be bound by the LLC Agreement as a member of the Fund. Sydecar LLC, a Delaware limited liability company, is the administrator of the Fund. The applicable management fee percentage for the Company is 0%. The Fund will use the Subscription Amount to subscribe approximately 6.667% interest of certain fund that holds an aggregate of 353,772 shares of Common Stock of Space Exploration Technologies Corp., a Texas corporation (“SpaceX”), comprising of 121,805 shares of Class A Common Stock and 231,967 shares of Class C Common Stock of Space X.
On September 25, 2025, Nova BVI closed its subscription of 99.815% interest in Preamble Capital, A Series of CGF2021 LLC (the “Preamble Capital”), a Delaware Limited Liability Company for $5,664,500.
On September 24, 2025, the Company incorporate Xmax Capital Ltd. in Samoa (“Xmax Samoa”). On October 3, 2025, Xmax Samoa incorporated Xmax Alpha Holdings Ltd. in Cayman Islands. On October 14, 2025, Xmax Samoa incorporated Xmax Beta Holdings Ltd. and Xmax Delta Holdings Ltd. in Cayman Islands. On October 15, 2025, Xmax Samoa incorporated Xmax Sigma Holdings Ltd. in Cayman Islands. Xmax Samoa is a holding company with no actual business operations. Xmax Beta Holdings Ltd., Xmax Delta Holdings Ltd. and Xmax Sigma Holdings Ltd. currently do not have any business operations.
On September 26, 2025, Preamble Capital entered into a Subscription Agreement (the “Subscription Agreement”) with a certain fund that holds an aggregate of 353,772 shares of Common Stock of SpaceX, comprising of 121,805 shares of Class A Common Stock and 231,967 shares of Class C Common Stock of Space X. Pursuant to the Subscription Agreement, Preamble Capital subscribed approximately 6.667% interest of such fund for an amount of $5,660,000 (the “Transaction”). On September 29, 2025, Preamble Capital closed the Transaction.
| 40 |
On October 15, 2025, Xmax Alpha entered into a Subscription Agreement (the “Agreement”) with Preamble Capital I, A Series of CGF2021 LLC (the “Fund”), a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Alpha subscribed 99.82% interest in the Fund in an amount equal to $5,605,000 (the “Subscription Amount”) and has become a member of the Fund and been bound by the LLC Agreement as a member of the Fund. Sydecar LLC, a Delaware limited liability company, is the administrator of the Fund. The applicable management fee percentage for the Company is 0%. October 15, 2025, the Company completed the subscription.
On October 16, 2025, the Fund entered into a Subscription Agreement with a certain fund to subscribe certain interest of such fund for an amount of $5,600,000, which will be used by such fund to purchase shares of common stock of SpaceX.
On December 2, 2025, Xmax Beta Holdings Ltd. (the “Xmax Beta”) entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Beta subscribed approximately 99.88% interest in Preamble X Capital I in an amount equal to US$8,461,428.80 (the “Subscription Amount”) and has become a member of Preamble X Capital I and been bound by the LLC Agreement as a member of Preamble X Capital I. Allocations Fund Administration, LLC is the administrative manager of Preamble X Capital I. The applicable management fee percentage for Xmax Beta is 0%. On December 2, 2025, Xmax Beta completed the subscription.
On December 2, 2025, Preamble X Capital I, a series of Preamble X Capital LLC entered into a Subscription Agreement with a dedicated SPV (the “SPV”) to subscribe 40,106 equity certificates in the SPV for an amount of US$2,999,928.80 (the “Transaction”) and the SPV holds 502,236 equity certificates, and each certificate is entitled to a share of Series B Preferred Stock of xAI and such Series B Preferred Stock of xAI are directly held by a certain fund, as previously disclosed in the Form 8-K filed by the Company with SEC on December 8, 2025, amended on December 10, 2025. On December 16, 2025, Preamble X Capital I closed the Transaction.
On December 8, 2025, Preamble X Capital I entered into a separate Subscription Agreement with a separate fund to subscribe certain interest of such fund for an amount of $5,400,000, which will be used by such fund to purchase shares of common stock of xAI.
On December 16, 2025, Xmax Beta entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Beta made an additional subscription in an aggregate amount of US$5,375,000 (the “Subscription Amount”), thereby increasing Xmax Beta’s interest in Preamble X Capital I to approximately 99.9%.
Allocations Fund Administration, LLC is the administrative manager of Preamble X Capital I. The applicable management fee percentage for Xmax Beta is 0%. On December 17, 2025, Xmax Beta completed the subscription.
On December 18, 2025, Preamble X Capital I entered into a Subscription Agreement with a certain fund to subscribe certain interest of such fund for an amount of $5,400,000, which will be used by such fund to purchase shares of xAI.
On December 2, 2025, Preamble X Capital I, a series of Preamble X Capital LLC entered into a Subscription Agreement with a dedicated SPV (the “SPV”) to subscribe 40,106 equity certificates in the SPV for an amount of US$2,999,928.80 (the “Transaction”) and the SPV holds 502,236 equity certificates, and each certificate is entitled to a share of Series B Preferred Stock of xAI and such Series B Preferred Stock of xAI are directly held by a certain fund, as previously disclosed in the Form 8-K filed by the Company with SEC on December 8, 2025, amended on December 10, 2025. On December 16, 2025, Preamble X Capital I closed the Transaction.
On February 4, 2026, Xmax Beta entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Beta made additional subscription in an aggregate amount of US$3,048,773.60 (the “Subscription Amount”), which increases Xmax Beta’s interest in Preamble X Capital I to approximately 99.9%. Allocations Fund Administration, LLC is the administrative manager of Preamble X Capital I. The applicable management fee percentage for Xmax Beta is 0%. On February 4, 2026, Xmax Beta completed the subscription.
On February 4, 2026, Preamble X Capital I entered into a Subscription Agreement with a dedicated SPV (the “SPV”) to subscribe 34,963 equity certificates in the SPV for an amount of US$3,048,773.60. Each certificate is entitled to a share of Series B Preferred Stock of X.AI Holdings Corp., a Nevada corporation (“xAI”), and such Series B Preferred Stock of xAI is directly held by a certain fund.
In March 2026, the Board of Directors of the Company approved a strategic expansion into artificial intelligence (“AI”) while continuing to operate and develop its existing furniture business. The initiative is designed to diversify revenue streams and position the Company for long-term growth amid challenging conditions in the furniture market. Under the new strategy, the Company plans to enter several high-growth AI segments, including AI software and hardware development, cloud and GPU compute infrastructure, AI model access and orchestration, and enterprise-focused AI agent deployment. The Company expects these initiatives to create new technology-driven business lines with scalable commercial potential. To support the expansion, the Company may raise capital for research and development, strategic partnerships, joint ventures, or acquisitions in AI and advanced technology sectors. The Company will continue strengthening its core furniture operations as one of its principal business lines. Pending deployment of capital into specific projects, the Company may also manage its capital through prudent investment strategies designed to enhance overall capital efficiency and support long-term shareholder value.
On April 1, 2026, the Company incorporated XMax AI Inc. in the State of Nevada. On June 4, 2026, the Company incorporate Elonx AI Holdings PTE. LTD in Singapore (“Elonx AI”). Both subsidiaries’ primary business is the provision of enterprise AI infrastructure and Model-as-a-Service (MaaS) solutions, enabling businesses to integrate large language model capabilities into their core operations through cloud-based inference APIs. Their services include enterprise AI APIs, technical support, and AI infrastructure for applications such as intelligent customer service, knowledge management, workflow automation, AI agents, long-context retrieval-augmented generation (RAG), AI coding assistants, multimodal content generation, and AI-powered research and search. Revenues are generated based on customers’ actual compute usage, and the Company does not engage in token trading, exchange, or market-making activities.
On April 6, 2026, XMax AI Inc. (“XMax AI”) entered into an AI Inference Platform Deployment and Service Agreement (the “Agreement”) with Cloud Alliance Inc. (the “Service Provider”), effective as of April 1, 2026. Pursuant to the Agreement, the Service Provider will develop and deploy an AI inference platform (“Platform”) to the Amazon Web Services (AWS) cloud environment designated by the Company for a total fixed service fee of US$400,000.
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On April 13, 2026, the Company entered into Securities Purchase Agreements (the “Agreements”) with twenty two non-U.S. person investors, namely Chen Yingjie, Fang Chongyi, Jiang Yan, Ma Ying, Ren Guangfei, Ren Tao, Shen Xiaoyan, Song Rongrong, Tan Kaichang, Tang Min, Wang Haifeng, Wang Jinhua, Wang Li, Wang Zecui, Wei Huifen, Yao Jing, Yu Suying, Zeng Qingyu, Zhang Bingli, Zhang Ciqiang, Zhao Xianxian and Zhao Zheyao (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers in a private placement for a total of 462,500 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $6.705 per share for an aggregate offering price of $3,101,062.50 (the “Private Placement”). The Private Placement will be completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.
On April 15, 2026, Xmax Beta entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, Xmax Beta made additional subscription in an aggregate amount of US$5,450,000 (the “Subscription Amount”), which increases Xmax Beta’s interest in Preamble X Capital I to more than 99.9%. Allocations Fund Administration, LLC is the administrative manager of Preamble X Capital I. The applicable management fee percentage for Xmax Beta is 0%. On April 15, 2026, Xmax Beta completed the subscription.
On April 17, 2026, Preamble X Capital I entered into a Subscription Agreement with a private investment fund (the “Fund”). Pursuant to the Agreement, Preamble X Capital I subscribed for approximately a 3.680% interest in the Fund for an aggregate amount of $5,350,000 (the “Transaction”), which amount the Fund intends to invest and acquire beneficially 258,051 shares of Class A Common Stock of Space Exploration Technologies Corp., a Texas corporation (“SpaceX”). On April 20, 2026, Preamble X Capital I completed the Transaction.
On April 22, 2026, XMax AI Inc. (“XMax AI” or the “Party A”), a wholly owned subsidiary of XMax Inc., entered into a Cloud Services Agreement (the “Agreement”) with SuperX AI Technology USA (the “Party B”). Pursuant to the Agreement, Party B shall provide to Party A: (a) cloud computing services - Party B delivers cloud computing resources to Party A utilizing a third party’s cloud infrastructure; (b) API access to large language models and AI models hosted on cloud platforms; and (c) value-added services including cloud architecture design and optimization, technical support and troubleshooting, billing and cost analysis, migration planning, security and compliance advisory, and related technical training. The service fees for the Agreement are US$4,800,000, payable monthly and the model and cloud resource discount rates apply to cumulative consumption up to the discount cap within each consecutive twelve (12) month period commencing from the service activation date. Party A retains full ownership of all data, content and information stored, processed or transmitted through the Services (“Customer Data”). Party B shall access Customer Data only to the extent necessary to perform its obligations and shall not use Customer Data for any other purpose. This Agreement becomes effective upon commencement of services. Unless either Party gives written non-renewal notice at least sixty (60) days before expiry, the term shall automatically renew for one (1) year. This Agreement terminates in the following circumstances, without liability to the other Party (provided that the terminating Party gives written notice): (a) dissolution of either Party (excluding reorganization, renaming or merger); (b) material breach by one Party entitling the other to terminate; (c) force majeure or mutual agreement; or (d) termination required by law. Unless otherwise agreed in this Agreement, neither Party may unilaterally terminate without cause during the term, failing which it shall bear liability for breach. Party A may terminate this Agreement upon thirty (30) days’ prior written notice, and shall pay all fees accrued through the effective date of termination (including used but unbilled amounts). Party B may terminate this Agreement upon thirty (30) days’ prior written notice, refunding any unused prepayments and remaining deposit (if any) within ten (10) days after the effective date of termination.
On April 24, 2026, the Company entered into Securities Purchase Agreements (the “Agreements”) with six non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers in a private placement for a total of 8,550,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $3.64 per share for an aggregate offering price of $31,122,000 (the “Private Placement”). The Private Placement will be completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.
On May 28, 2026, the Company entered into Securities Purchase Agreements (the “Agreements”) with certain non-U.S. investors identified on the signature pages thereto (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers in a private placement for a total of 486,500 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $7.347 per share for an aggregate offering price of $3,574,315.50 (the “Private Placement”). In addition, without the prior written consent of the Company, the Purchasers shall not, during the period commencing on the date of the Agreements and ending 18 months after such date (the “Lock-Up”) offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of, directly or indirectly, any Shares or any securities convertible into or exercisable or exchangeable for Shares, with respect to which such Purchaser has the power of disposition. The Private Placement was completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.
On July 1, 2026, the Company entered into Securities Purchase Agreements (the “Agreements”) with certain non-U.S. investors identified on the signature pages thereto (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers in a private placement for a total of 434,600 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $8.454 per share for an aggregate offering price of $3,674,108.40 (the “Private Placement”). In addition, without the prior written consent of the Company, the Purchasers shall not, during the period commencing on the date of the Agreements and ending 18 months after such date (the “Lock-Up”) offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of, directly or indirectly, any Shares or any securities convertible into or exercisable or exchangeable for Shares, with respect to which such Purchaser has the power of disposition. The Private Placement was completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.
On July 6, 2026, Xmax Beta Holdings Ltd. (the “Company”) entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, the Company made additional subscription in an aggregate amount of US$8,770,000 (the “Subscription Amount”), which increases the Company’s interest in Preamble X Capital I to more than 99.9%. Allocations Fund Administration, LLC is the administrative manager of Preamble X Capital I. The applicable management fee percentage for the Company is 0%. On July 7, 2026, the Company completed the subscription.
On July 17, 2026, Xmax Beta Holdings Ltd. (the “Company”) entered into a Subscription Agreement (the “Agreement”) with Preamble X Capital I, a series of Preamble X Capital LLC, a Delaware Limited Liability Company. Pursuant to the Agreement, the Company made additional subscription in an aggregate amount of US$8,320,000 (the “Subscription Amount”), which increases the Company’s interest in Preamble X Capital I to more than 99.9%. Allocations Fund Administration, LLC is the administrative manager of Preamble X Capital I. The applicable management fee percentage for the Company is 0%. On July 17, 2026, the Company completed the subscription.
On July 17, 2026, Preamble X Capital I entered into a Subscription Agreement with a private investment fund (the “Fund”). Pursuant to the agreement, Preamble X Capital I subscribed for approximately 48% interests in the Fund for an aggregate amount of $8,000,000 (the “Transaction”). The Fund Manager intends to invest, indirectly, substantially all of its investable assets in shares of common or preferred stock of Figure AI Inc., a Delaware corporation. On July 22, 2026, Preamble X Capital I completed the Transaction.
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Principal Factors Affecting Our Financial Performance
The core focus of the Company’s furniture business today is entirely centered on our products, identifying a fashion-driven generational shift in the general perception and consumption of furniture, being more aware of actual consumer tastes and how best to fulfil and engage that need, and closely integrating product development alongside marketing results in appealing products that adheres to the scope of our target demographic of decision makers in the design, staging and retail fields. A process that is continually refined upon each release cycle, maintaining a singular, cohesive vision. In short, we have better identified our customers and how to cater to them – in the process gaining greater traction with every product launch considerably more so on an international level than ever previous. In addition, we have been developing AI software and platform-based services to provide our customers access to XMax’s artificial intelligence models through API-based (Application Programming Interface) services. These services are provided via our recently deployed AI platform, enabling the customer to integrate, distribute, and commercialize these capabilities globally under its own branding. Our platform supports high availability and scalable deployment, enabling customers to efficiently integrate advanced AI capabilities into their commercial applications. We believe these new strategies have provided new revenues and will continue to provide us with significant long-term growth opportunities.
Significant factors that we believe could affect our operating results for our furniture business are: (i) prices of our furniture products to our domestic and international retailer and wholesaler customers and their markups to end consumers; (ii) general economic conditions in the U.S., Chinese, and other international markets; and (iii) trade war and tariffs imposed by the United States on products manufactured in China and other Asian countries where we purchase our products; and (iv) high interest rate, inflation and slow- down in real estate market. We believe most of our customers are willing to pay for our high quality and stylish products, timely delivery, and strong production capacity at price levels which we expect will allow us to maintain a relatively high gross profit margin for our products. We do not manufacture our products, but instead we utilize third-party manufacturers. In response to the tariffs imposed by the United States on products manufactured in China, we have been in the process of seeking and shifting a portion of our product manufacturing from third-party manufacturers located in China to third-party manufacturers located in other parts of Asia, such as Vietnam, India and/or Malaysia, countries with lower tariffs. However, due to the quality issue and recent increase of tariff announced by President Trump on products from India and other southeastern Asian countries, we still purchase most of our products from China. Implementation of a relocation of manufacturing (which by necessity includes an assessment of the factory’s ability to deliver the quantity of the product, in accordance with the Company’s specifications, and in accordance with the Company’s quality control requirements) is time-consuming and has a lot of uncertainties such as the increase of the tariff of the products from these countries, and only a small portion of suppliers manufacturing our products has been transitioned from China to Malaysia and India starting in 2020. Most of our manufacturing will continue to be performed in China because the good quality and the intellectual know-how necessary to manufacture certain products is not generally available in other Asian countries. Consumer preference trends favoring high quality and stylish products and lifestyle-based furniture suites should also allow us at least to maintain our gross profit margins. The markets in North America are challenging because such markets are experiencing a slow-down and may be entering a recession due to high interest rate and inflation.
Significant factors that we believe could affect our operating results for our AI software and platform-based service are:
(i) Customer adoption and retention of our newly developed AI software and platform-based services: our revenue growth depends on our ability to attract new customers to our artificial intelligence software and platform-based services. We measure customer adoption through key indicators such as the number of enterprise customers, annual recurring revenue, net dollar-based retention rates, and platform usage volumes. Customer adoption is influenced by the breadth and quality of our AI models and tools, the competitive landscape, and our ability to demonstrate measurable return on investment for our customers. We expect to continue to invest meaningfully in sales and marketing to drive further adoption, and there can be no assurance that such investments will result in proportionate increases in revenue.
(ii) Investment in research and development: our ability to maintain and extend our competitive position depends on our continued investment in research and development, including the development of new AI models, features, and platform capabilities. We have invested, and expect to continue to invest, significant resources in research and development. These investments may increase our operating expenses in the near term and may not yield the anticipated revenue or other benefits on a timely basis, or at all. We believe, however, that continued investment in innovation is essential to our long-term growth strategy.
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(iii) Managing the costs of cloud computing infrastructure: our AI software and platform-based services require substantial cloud computing infrastructure, including graphics processing units and other specialized hardware, to train, deploy, and scale our AI models. The cost of compute resources represents a significant component of our cost of revenue and operating expenses. Fluctuations in the pricing and availability of cloud computing capacity may materially affect our gross margins and overall profitability. We seek to optimize our infrastructure costs through improved model efficiency, strategic partnerships with cloud service providers, and the negotiation of favorable pricing arrangements. Our ability to manage these costs effectively as we scale our platform will be a key determinant of our financial performance.
(iv) Competitive landscape for AI software and platform-based services and evolving regulatory landscape governing the development, deployment, and commercialization of artificial intelligence technologies.
Critical Accounting Policies
While our significant accounting policies are described more fully in Note 2 to our accompanying unaudited condensed consolidated financial statements, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this Management’s Discussion and Analysis.
There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for XMax Inc. and its subsidiaries, Diamond Bar, i Design, Nova BVI, Nova Samoa, Nova Malaysia, XMax AI, Inc. Elonx AI, and XMax Capital and its subsidiaries.
Reverse Split
On May 22, 2023, the Company filed a Certificate of Change with the Secretary of State of Nevada with an effective date of May 22, 2023, at which time a 1-for-5 reverse stock split of the Company’s authorized shares of common stock, par value $0.001, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”), was effected. All references to shares and per share data have been retroactively restated to reflect such split.
Amendments to Articles of Incorporation
On September 5, 2023, the Company filed the Certificate of Change (the “Amendment”) with the Secretary of State for the State of Nevada to amend its Articles of Incorporation to increase the amount of authorized shares of its common stock, par value $0.001 per share, from 3,000,000 to 250,000,000. The Amendment was approved by the Company’s Board of Directors (the “Board”) on June 28, 2023 and by the shareholders at a special meeting of the Company’s shareholders held on August 31, 2023. The Amendment does not affect the rights of the Company’s shareholders and was effective immediately upon filing.
On November 3, 2025, the Company filed a Certificate of Change (the “Share Increase Amendment”) with the Secretary of State for the State of Nevada to amend its Articles of Incorporation to increase the amount of authorized shares of its common stock, par value $0.001 per share, from 250,000,000 shares to 5,000,000,000 shares. The Share Increase Amendment was approved by the Company’s Board of Directors (the “Board”) on September 15, 2025 and by the shareholders at a special meeting of the Company’s shareholders held on October 31, 2025. The Share Increase Amendment does not affect the rights of the Company’s shareholders and was effective immediately upon filing.
On November 3, 2025, the Company filed a Certificate of Amendment (the “Name Change Amendment”) with the Secretary of State for the State of Nevada to amend its Articles of Incorporation to change the Company’s name from “Nova LifeStyle, Inc.” to “XMax Inc.” The Name Change Amendment was approved by the Board on September 15, 2025 and by the shareholders at a special meeting of the Company’s shareholders held on October 31, 2025. The Name Change Amendment was effective immediately upon filing.
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Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. In accordance with ASC 250, the changes in estimates will be recognized in the same period of changes in facts and circumstances. The Company bases its estimates on past experiences and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, fair value estimation of investment, the allowance for credit loss, valuation of inventories, the valuation of stock-based compensation, income taxes and unrecognized tax benefits, assumptions used in assessing impairment of long-lived assets and goodwill, and loss contingencies. Actual results could differ from those estimates.
Accounts Receivable
Since January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using the modified retrospective transition method. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. Upon adoption, the Company changed the impairment model to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets.
The Company maintains an allowance for credit losses and records the allowance for credit losses as an offset to accounts receivable and the estimated credit losses charged to the allowance is classified as “General and administrative expenses” in the unaudited condensed consolidated statements of loss and comprehensive loss. The Company assesses collectability by reviewing accounts receivable on aging schedules because the accounts receivable were primarily consisted of receivables arising from product sales. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the balances, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Delinquent account balances are written-off against the allowance for expected credit loss after management has determined that the likelihood of collection is not probable.
We maintained an allowance for expected credit loss of $343 and $258 as of June 30, 2026 and December 31, 2025, respectively. During the six months ended June 30, 2026 and 2025, expected credit losses provision was $85 and ($6), respectively; and $($36) and ($293) for the three months ended June 30, 2026 and 2025. As of June 30, 2026, we had gross receivable of $2,454,042 of which $2,419,747 was over 90 days past due.
Advances to Suppliers
Advances to suppliers represent amounts paid to suppliers in advance for goods that are yet to be delivered and from which future economic benefits are expected to flow to the Company within the normal operating cycle. Based on our historical records and in normal circumstances, we generally receive goods within 4 to 6 months from the date the advance payment is made.
Income Taxes
Income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
In its interim financial statements, the Company follows the guidance in ASC 270 “Interim reporting” and ASC 740 “Income Taxes” whereby the Company utilizes the expected annual effective rate in determining its income tax provision. The income tax expense for the six and three months ended June 30, 2026 is $7,809,615, and is mainly attributable to deferred tax expense recognized on the unrealized gain in the Preamble investment. The income tax benefit for the six and three months ended June 30, 2025 is $63,257 and $997, respectively, and is mainly due to true up the tax deduction wrote off Jade mts for inventory impairment over the prior years in Nova Malaysia.
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The Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.
Under the provisions of ASC Topic 740, when tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
XMax Inc. (formerly Nova Lifestyle, Inc.), Diamond Bar Outdoors, Inc. (“Diamond Bar”), and XMax AI Inc. are subject to U.S. federal and state income taxes. Nova Furniture Limited was incorporated in the British Virgin Islands; Nova Furniture Ltd. and Xmax Capital Ltd. were incorporated in Samoa; and Xmax Alpha Holdings Ltd., Xmax Beta Holdings Ltd., Xmax Delta Holdings Ltd., and Xmax Sigma Holdings Ltd. were incorporated in the Cayman Islands. There is no income tax for companies domiciled in the British Virgin Islands, Samoa, or the Cayman Islands. Accordingly, the Company’s consolidated financial statements do not present any income tax provision related to the British Virgin Islands, Samoa, or Cayman Islands tax jurisdictions where these entities are domiciled. Elonz AI Holdings Pte. Ltd. was incorporated in Singapore during the second quarter of 2026 and is subject to Singapore corporate income tax. Accordingly, the Company records a Singapore income tax provision, when applicable. Nova Living Ltd. was incorporated in Malaysia and ceased business operations; the entity completed its de-registration with the Malaysian government in the first quarter of 2026.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA extends permanently, with modifications, tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act and restores and makes permanent many business provisions, such as full expensing for domestic research and development and capital investments. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The enactment of the OBBBA does not have a material impact on the results from operations for the current period.
The Tax Cuts and Jobs Act of 2017 (the “Act”) created new taxes on certain foreign-sourced earnings such as global intangible low-taxed income (“GILTI”) under IRC Section 951A, which is effective for the Company for tax years beginning after January 1, 2018. For tax years beginning after December 31, 2025, the One Big Beautiful Bill Act renamed GILTI as net CFC tested income (“NCTI”) and modified the Section 951A calculation. For the quarter ended June 30, 2026, the Company has calculated its best estimate of the impact of NCTI, if any, in its income tax provision in accordance with applicable tax law and guidance available as of the date of this filing.
The Tax Cuts and Jobs Act of 2017 also amended IRC Section 174 to require specified research and experimental expenditures to be capitalized and amortized for tax years beginning after December 31, 2021. The One Big Beautiful Bill Act subsequently restored current expensing for domestic research and experimental expenditures paid or incurred in tax years beginning after December 31, 2024, while foreign research and experimental expenditures remain subject to capitalization and amortization over 15 years. For the six months ended June 30, 2026, the Company expensed current-year U.S. research and experimental expenditures for federal income tax purposes. The Company did not elect to accelerate the deduction of unamortized domestic research and experimental expenditures from prior years and continues to amortize such amounts over the remaining applicable amortization period. Since the Company’s research and experimental expenditures were incurred within the United States and the amount is immaterial, the Company does not anticipate a material impact to its income tax provision.
As of June 30, 2026 and December 31, 2025, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately $21.8 million and $21.7 million of which substantially all was previously subject to U.S. tax, the one-time transition tax on foreign unremitted earnings required by the Tax Act, GILTI, or NCTI, as applicable. Those earnings are considered to be permanently reinvested and accordingly, no deferred tax expense is recorded for U.S. federal and state income tax or applicable withholding taxes.
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As of June 30, 2026, unrecognized tax benefits were approximately $0. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was nil as of June 30, 2026. As of June 30, 2025, unrecognized tax benefits were approximately $0. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was nil as of June 30, 2025.
A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the six months ended June 30, 2026 and 2025, is as follows:
| Gross UTB | ||||||||
| 2026 | 2025 | |||||||
| Balance – January 1 | - | - | ||||||
| Foreign exchange adjustment | - | - | ||||||
| Balance – June 30 | $ | - | $ | - | ||||
As of June 30, 2026 and December 31, 2025, the Company had cumulatively accrued approximately nil and nil for estimated interest and penalties related to unrecognized tax benefits. The Company recorded interest and penalties related to unrecognized tax benefits as a component of income tax (benefit)/expense, which totaled nil and nil for the six months ended June 30, 2026 and 2025, respectively; and nil and nil for the three months ended June 30, 2026, and 2025, respectively, related to the Company’s continuing operations. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next 12 months.
XMax Inc. (formerly Nova Lifestyle, Inc.), Diamond Bar, XMax AI and I Design are subject to U.S. federal and state income taxes and tax years 2020-2024 remain open to examination by tax authorities in the U.S.
Intangible Assets
Intangible assets consist primarily of computer software acquired for internal use. Acquired intangible assets are initially recorded at the acquisition-date fair value. Intangible assets are amortized on a straight-line basis over their estimated useful lives and are carried at cost less accumulated amortization. The estimated useful life of computer software is generally 5 years.
Revenue Recognition
The Company recognizes revenues when its customers obtain control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASC-606: (i) identifies contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenues when (or as) it satisfies the performance obligation.
The Company derives its revenues primarily from two business segments to (i) sales of residential and commercial furniture, and (ii) provide API-based (Application Programming Interface) services.
Sales of residential and commercial furniture
Revenue from product sales is recognized when the customer obtains control of our product, which typically occurs upon shipment to the customer. Each customer order is being distinct and separately identifiable from other customer orders as a single performance obligation to deliver the ordered product in exchange for consideration. The Company offers credit sales to customers with credit periods range from 30 to 90 days. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.
Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, returns and rebates. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company’s customer.
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The Company’s sales policy allows for product returns within the warranty period if the product is defective and the defects are the Company’s fault. As alternatives to the product return option, the customers have the option of requesting a discount from the Company for products with quality issues or of receiving replacement parts from the Company at no cost. The amount for product returns, the discount provided to the Company’s customers, and the costs for replacement parts were immaterial for the three months ended June 30, 2026 and 2025.
The Company considers itself acting as a principal for sales of goods which is evidenced by (i) the Company is primarily responsible for fulfilling the promise to provide the specified goods, (ii) the Company has inventory risk before the specified goods have been transferred to a customer or after transfer of control to the customer, (iii) the Company has discretion in establishing the price for the specified good. Thus, the Company’s’ revenue is recognized at a point in time when a promised good is delivered to a customer.
API-based services revenue
API-based service revenue primarily consists of service income from providing via our recently deployed AI platform, enabling the customer to integrate, distribute, and commercialize these capabilities globally under its own branding. Our platform supports high availability and scalable deployment, enabling customers to efficiently integrate advanced AI capabilities into their commercial applications. The Company acts as the principal in these arrangements as it maintains control over the platform, establishes pricing, and bears the primary responsibility for service fulfillment. Transaction prices are determined based on the total consideration specified in the contracts, net of any volume discounts or price concessions.
The Company offers these services through two primary billing models: (1) a usage-based (post-paid) model, where customers are billed based on actual monthly API consumption, and (2) a prepaid model, where customers purchase usage limits upfront. For the prepaid model, upfront payments are initially recorded as deferred revenue (contract liabilities). Under both models, revenue is recognized over time as the underlying API services are continuously rendered and consumed by the customer. Pursuant to certain contract terms, upon contract expiration or early termination, any unearned remaining balance of customer deposits is calculated and refunded to the customer within the timeframe specified in the applicable contract.
Disaggregation of Revenue
The following table provides information about disaggregated revenue by product or service type:
| For six months ended June 30 | Three Month Ended June 30 | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue from sales | ||||||||||||||||
| Residential and commercial furniture | $ | 3,420,512 | $ | 5,191,941 | $ | 1,638,791 | $ | 2,556,223 | ||||||||
| API-based services | 1,097,930 | - | 1,097,930 | - | ||||||||||||
| Total revenues | $ | 4,518,442 | $ | 5,191,941 | $ | 2,736,721 | $ | 2,556,223 | ||||||||
Foreign Currency Translation and Transactions
The accompanying consolidated financial statements are presented in United States Dollar (“$” or “USD”), which is also the functional currency of XMAX (Nova LifeStyle), Nova Furniture, Nova Samoa, Diamond Bar, XMax AI, Elonx AI, I Design, Xmax Capital, Xmax Alpha Holdings Ltd, Xmax Beta Holdings Ltd, Xmax Delta Holdings Ltd and Xmax Sigma Holdings Ltd.
The Company’s subsidiaries with operations in Singapore and Malaysia use their local currency, the Singapore Doller (“SGD”) and Malaysian Ringgit (“RM”), as their functional currency. The entities’ functional currencies are the currency of the primary economic environment in which they operate, which are the currencies of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements.
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Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are re-measured at the applicable rates of exchange in effect at that date. Gains and losses resulting from foreign currency re-measurement are included in the statements of operations.
The financial statements are presented in U.S. dollars. Assets and liabilities are translated into U.S. dollars at the current exchange rate in effect at the balance sheet date, and revenues and expenses are translated at the average of the exchange rates in effect during the reporting period. Stockholders’ equity accounts are translated using the historical exchange rates at the date the entry to stockholders’ equity was recorded, except for the change in retained earnings during the period, which is translated using the historical exchange rates used to translate each period’s income statement. Differences resulting from translating functional currencies to the reporting currency are recorded in accumulated other comprehensive income in the balance sheets.
Translation of amounts from RM into U.S. dollars has been made at the following exchange rates:
| Balance sheet items, except for equity accounts | ||||
| June 30, 2026 | - | |||
| December 31, 2025 | RM 4.06 to 1 | |||
| Income Statement and cash flow items | ||||
| For the six months ended June 30, 2026 | - | |||
| For the six months ended June 30, 2025 | RM 4.38 to 1 |
Translation of amounts from SGD into U.S. dollars has been made at the following exchange rates:
| Balance sheet items, except for equity accounts | ||||
| June 30, 2026 | SGD 1.29 to 1 | |||
| December 31, 2025 | - | |||
| Income Statement and cash flow items | ||||
| For the six months ended June 30, 2026 | SDG 1.28 to 1 | |||
| For the six months ended June 30, 2025 | - |
New Accounting Pronouncements
Recently Adopted Accounting Standards
In March 2025, the FASB issued ASU 2025-02—Liabilities (405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. The amendments in this Update are effective immediately and on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company adopted the ASU in 2025. The adoption did not have a material impact on the financial statements.
On July 4, 2025, the U.S. H.R.1, an act to provide for reconciliation pursuant to title II of H. Con. Res. 14. (the “OBBBA”) was enacted. The OBBBA introduces multiple tax law and other legislative changes, including modifications to income tax provisions such as domestic research and development expenses, capital expenditures, and U.S. taxation of international earnings; the repeal or acceleration of the sunset of certain tax credits under the 2022 Inflation Reduction Act and elimination of certain penalties for violations of certain regulatory credit programs. We have recognized the effects of the OBBBA provisions in our financial results to the extent they are applicable to the three months ended June 30, 2026. We will continue to evaluate the impact of these provisions on our 2026 and subsequent consolidated financial statements, including loss of certain regulatory credit sales tied to our products and changes to the costs of our products.
In March 2023, the FASB issued ASU 2023-01, Lease (Topic 842): Common Control Arrangements, which clarifies the accounting for leasehold improvements associated with leases between entities under common control (hereinafter referred to as common control lease). ASU 2023-01 requires entities to amortize leasehold improvements associated with common control lease over the useful life to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset through a lease, and to account for any remaining leasehold improvements as a transfer between entities under common control through an adjustment to equity when the lessee no longer controls the underlying asset. This ASU will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. An entity may apply ASU 2023-01 either prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of ASU 2023-01 will have on our unaudited condensed consolidated financial statement presentations and disclosures.
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ln December 2023, the FASB issued Accounting Standards Update No.2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation,(2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3)income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual period beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its unaudited condensed consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient and, if applicable, an accounting policy election to simplify the measurement of credit losses for certain receivables and contract assets. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in any interim or annual period in which financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.
Recently Issued But Not Yet Adopted Accounting Pronouncements
On November 4, 2024, the FASB issued an ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”) to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions (such as cost of sales; selling, general, and administrative expenses; and research and development). The amendments in the ASU require disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same tabular disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. In January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments, as clarified by ASU 2025-01, are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statement presentation or disclosures.
In January 2025, the FASB issued ASU 2025-01 Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather than in annual reporting period. The FASB’s intent in the basis for conclusions of ASU 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.
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In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquirer in the Acquisition of a Variable Interest Entity. The amendments provide guidance on identifying the accounting acquirer in transactions involving a variable interest entity. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting period within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.
In May 2025, the FASB issued ASU 2025-04, Compensation - Stock Compensation (Topic 18) and Revenue from contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. The amendments provide guidance on identifying the accounting acquirer in transactions involving a variable interest entity. The amendments clarify the accounting for share-based consideration payable to a customer under Topic 718 and Topic 606. The amendments are effective for annual reporting periods, including interim reporting period within those annual periods, beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date; or follow a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption; or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The ASU establishes authoritative guidance in GAAP about accounting for government grants received by business entities, clarifies the appropriate accounting, in an effort to reduce diversity in practice, and increase consistency of application across business entities. The ASU is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Adoption of this ASU can be applied a modified prospective approach, a modified retrospective approach, or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied either a prospective or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
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In April 2026, the FASB issued ASU 2026-01—Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The amendments in this Update clarify the initial measurement of paid-in-kind dividends on preferred stock that is classified within equity. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in any interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. An entity adopting the amendments in an interim reporting period should apply them as of the beginning of the annual reporting period that includes that interim reporting period. The Company is currently evaluating the impact that the adoption of ASU 2026-01 will have on its consolidated financial statement presentation or disclosures.
We do not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on our financial statement presentation or disclosures.
Results of Operations
Comparison of Three Months Ended June 30, 2026 and 2025
The following table sets forth the results of our operations for the three months ended June 30, 2026 and 2025.
| Three Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| $ | % of Sales | $ | % of Sales | |||||||||||||
| Sales | $ | 2,736,721 | $ | 2,556,223 | ||||||||||||
| Cost of sales | (1,646,454 | ) | (60 | )% | (1,272,176 | ) | (50 | )% | ||||||||
| Gross profit | 1,090,267 | 40 | % | 1,284,047 | 50 | % | ||||||||||
| Operating expenses | (2,307,825 | ) | (84 | )% | (1,480,541 | ) | (58 | )% | ||||||||
| Loss from operations | (1,217,558 | ) | (44 | )% | (196,494 | ) | (8 | )% | ||||||||
| Other income (expenses), net | 41,455,542 | 1515 | % | (94,410 | ) | (4 | )% | |||||||||
| Income tax (expense) benefit | (7,809,615 | ) | (285 | )% | 997 | - | % | |||||||||
| Net income (loss) | 32,428,369 | 1185 | % | (289,907 | ) | (11 | )% | |||||||||
Sales
Sales for the three months ended June 30, 2026 were $2.74 million, an increase of 7% from $2.56 million for the same period of 2025. Sales, excluding our API-based service revenue, for the three months ended June 30, 2026 were $1.64 million, a decrease of 36% from $2.56 million for the same period of 2025. This decrease in sales resulted primarily from 35.13% decrease in sales volume and 1.17% decrease in average selling price. Our three largest selling product categories for the three months ended June 30, 2026 were sofa, coffee tables and beds, which accounted for approximately 59%, 12% and 11% of sales, respectively. For the three months ended June 30, 2025, the three largest selling categories were sofas, coffee tables and beds, which accounted for approximately 54%, 10% and 9% of sales, respectively.
The $0.92 million decreases in sales for the three months ended June 30, 2026, compared to the same period of 2025, was mainly due to decreased sales to North America. Sales to North America decreased by 36% to $1.64 million for the three months ended June 30, 2026, compared to $2.56 million for the same period of 2025, such decrease mainly due to decrease in sales volume by 35% and 1% in average selling price from the customers in North America.
During three months ended June 30, 2026, our API-based service revenue was $1.10 million, an increase of 100% from nil million for the same period of 2025. The increase in the service revenue mainly due to we launched our API platform and provided API-based service to our customers in June 2026.
Cost of Sales
The following table presents our costs of revenues by products and services provided as percentage of total cost of revenues for the periods presented.
| Three Months Ended June 30 | ||||||||||||||||
2026 | 2025 | |||||||||||||||
| USD | Percentage | USD | Percentage | |||||||||||||
| Sale of Residential and commercial furniture | $ | 449,952 | 27 | % | $ | 1,272,176 | 100 | % | ||||||||
| API-based fee | 1,196,502 | 73 | % | - | 0 | % | ||||||||||
| Total cost of sales | $ | 1,646,454 | 100 | % | $ | 1,272,176 | 100 | % | ||||||||
Cost of sales consists of costs of finished goods and materials purchased from third-party manufacturers and API-based fee. Total cost of sales increased by 29% or $0.37 million to $1.64 million for the three months ended June 30, 2026, compared to $1.27 million for the same period of 2025. Cost of sales as a percentage of sales increased to 60% for the three months ended June 30, 2026, compared to 50% for the same period of 2025. The increase in cost of sales in dollar term and in cost of sales as a percentage of sales are a result of expanding new AI business to our customers. Our API-based fee was increased 100% to $1.20 million from nil in the same period of 2025. Our API-based fee was occupied 73% of our total cost of sales for the three months ended June 30, 2026, compared with 0% for the same period of 2025.
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Gross Profit
Gross profit was $1.09 million for the three months ended June 30, 2026, compared to $1.28 million for the same period of 2025, representing a decrease in gross profit of $0.19 million. Our gross profit margin was 40% for the three months ended June 30, 2026, compared to 50% for the same period of 2025. The gross profit, excluding API-based service revenue, was $1.19 million for the three months ended June 30, 2026, compared to $1.28 million for the same period of 2025, representing a decrease in gross profit of $0.10 million. Our gross profit margin, excluding API-based service revenue, was 73% for the three months ended June 30, 2026, compared to 50% for the same period of 2025. The decrease in gross profit in dollar term was mainly due to a result of less sales. The increase in gross profit in percentage was mainly due to selling more products with higher profit margin.
Operating Expenses
Operating expenses consisted of selling, general and administrative expenses, and research and development. Operating expenses were $2.31 million for the three months ended June 30, 2026, compared to $1.48 million for the same period of 2025. Selling expenses decreased by 6%, or $0.02 million, to $0.29 million for the three months ended June 30, 2026, from $0.31 million for the same period of 2025, primarily due to decreased marketing and advertising expenses. Also, general and administrative expenses increased by 72%, or $0.85 million, to $2.02 million for the three months ended June 30, 2026, from $1.17 million for the same period of 2025, primarily due to an increase in cloud service fee of $0.40 million and filing fee of $0.13 million, while the decrease was partially offset by a decrease in auditing fee of $0.04 million, consulting fee of $0.07 million and travel expense of $0.03 million.
Other Income (Expenses), Net
Other income, net was $41.46 million for the three months ended June 30, 2026, compared to other expense, net of $0.09 million for the same period of 2025, representing an increase in other income of $41.55 million. The increase in other income was due primarily to an increase in unrealized gain of $42.12 million from the investment in the fund of Preamble.
Income Tax (expense) Benefit
Income tax (expense) benefit was ($7.81) million and $997 for the three months ended June 30, 2026 and 2025, respectively. The income tax expense for the three months ended June 30, 2026 was mainly attributable to deferred tax expense recognized on unrealized gain of $42.12 million in the Preamble investment.
Net Income (Loss)
As a result of the foregoing, our net income was $32.43 million for the three months ended June 30, 2026, compared to $0.29 million of net loss for the same period of 2025.
Comparison of Six Months Ended June 30, 2026 and 2025
The following table sets forth the results of our operations for the six months ended June 30, 2026 and 2025.
| Six Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| $ | % of Sales | $ | % of Sales | |||||||||||||
| Sales | $ | 4,518,442 | $ | 5,191,941 | ||||||||||||
| Cost of sales | (2,545,706 | ) | (56 | )% | (2,703,660 | ) | (52 | )% | ||||||||
| Gross profit | 1,972,736 | 44 | % | 2,488,281 | 48 | % | ||||||||||
| Operating expenses | (3,725,147 | ) | (82 | )% | (2,878,135 | ) | (55 | )% | ||||||||
| Loss from operations | (1,752,411 | ) | (39 | )% | (389,854 | ) | (7 | )% | ||||||||
| Other income (expenses), net | 42,181,909 | 934 | % | (302,181 | ) | (6 | )% | |||||||||
| Income tax (expense) benefit | (7,809,615 | ) | (173 | )% | 63,257 | 1 | % | |||||||||
| Net income (loss) | 32,619,883 | 722 | % | (628,778 | ) | (12 | )% | |||||||||
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Sales
Sales for the six months ended June 30, 2026 were $4.52 million, a decrease of 13% from $5.19 million for the same period of 2025. Sales, excluding API-based service revenue, for the six months ended June 30, 2026 were $3.42 million, a decrease of 34% from $5.19 million for the same period of 2025. This decrease in sales resulted primarily from 36.10% decrease in sales volume, while partially offset by 3.11% increase in average selling price. Our three largest selling product categories for the six months ended June 30, 2026 were sofa, beds and coffee tables, which accounted for approximately 59%, 11% and 10% of sales, respectively. For the six months ended June 30, 2025, the three largest selling categories were sofas, beds and coffee tables, which accounted for approximately 54%, 13% and 10% of sales, respectively.
The $1.76 million decrease in sales for the six months ended June 30, 2026, compared to the same period of 2025, was mainly due to decreased sales to North America. Sales to North America decreased by 34% to $3.42 million for the six months ended June 30, 2026, compared to $5.17 million for the same period of 2025, such decrease mainly due to decrease in sales volume by 36% from the customers in North America. Sales to other countries decreased by $0.02 million to $1,519 for the six months ended June 30, 2026, from $0.02 million for the same period of 2025, primary due to less sales order received from our customers in other countries.
During six months ended June 30, 2026, our API-based service revenue was $1.10 million, an increase of 100% from nil million for the same period of 2025. The increase in the service revenue mainly due to we launched our API platform and provided API-based service to our customers in June 2026.
Cost of Sales
The following table presents our costs of revenues by products and services provided as percentage of total cost of revenues for the periods presented.
| Six Months Ended June 30 | ||||||||||||||||
2026 | 2025 | |||||||||||||||
| USD | Percentage | USD | Percentage | |||||||||||||
| Sale of Residential and commercial furniture | $ | 1,349,204 | 53 | % | $ | 2,703,660 | 100 | % | ||||||||
| API-based fee | 1,196,502 | 47 | % | - | 0 | % | ||||||||||
| Total cost of sales | $ | 2,545,706 | 100 | % | $ | 2,703,660 | 100 | % | ||||||||
Cost of sales consists of costs of finished goods and materials purchased from third-party manufacturers and API-based fee. Total cost of sales decreased by 6% to $2.55 million for the six months ended June 30, 2026, compared to $2.70 million for the same period of 2025. Cost of sales as a percentage of sales increased to 56% for the six months ended June 30, 2026, compared to 52% for the same period of 2025. The decrease in cost of sales in dollar term is a result of selling more products with higher profit margins. The increase in cost of sales as a percentage of sales is a result of costs of expanding new AI business to our customers. Our API-based fee was increased 100% to $1.20 million from the same period of 2025. Our API-based fee was occupied 47% of our total cost of sales for the six months ended June 30, 2026, compared with 0% for the same period of 2025.
Gross Profit
Gross profit was $1.97 million for the six months ended June 30, 2026, compared to $2.49 million for the same period of 2025, representing a decrease in gross profit of $0.52 million. Our gross profit margin was 44% for the six months ended June 30, 2026, compared to 48% for the same period of 2025. The gross profit, excluding API-based service revenue, was $2.07 million for the six months ended June 30, 2026, compared to $2.49 million for the same period of 2025, representing a decrease in gross profit of $0.42 million. Our gross profit margin, excluding API-based service revenue, was 61% for the six months ended June 30, 2026, compared to 48% for the same period of 2025. The decrease in gross profit in dollar term was mainly due to a result of less sales. The increase in gross profit in percentage was mainly due to selling more products with higher profit margin.
Operating Expenses
Operating expenses consisted of selling, general and administrative expenses, and research and development. Operating expenses were $3.73 million for the six months ended June 30, 2026, compared to $2.88 million for the same period of 2025. Selling expenses increased by 4%, or $0.02 million, to $0.66 million for the six months ended June 30, 2026, from $0.64 million for the same period of 2025, primarily due to increased marketing and advertising expenses. Also, general and administrative expenses increased by 37%, or $0.82 million, to $3.07 million for the six months ended June 30, 2026, from $2.24 million for the same period of 2025, primarily due to an increase in cloud service fee of $0.40 million, filing fee of $0.07 million and legal and professional fee of $0.21 million, while the decrease was partially offset by a decrease in consulting fee of $0.18 million and auditing fee of $0.06 million.
Other Income (Expenses), Net
Other income, net was $42.18 million for the six months ended June 30, 2026, compared to other expense, net of $0.30 million for the same period of 2025, representing an increase in other income of $42.48 million. The increase in other income was due primarily to an increase in unrealized gain of $42.92 million from the investment in the fund of Preamble.
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Income Tax (Expense) Benefit
Income tax (expense) benefit was ($7.81 million) and $63,257 for the six months ended June 30, 2026 and 2025, respectively. The income tax expense for the six months ended June 30, 2026 was mainly attributable to deferred tax expense recognized on unrealized gain of $42.92 million in the Preamble investment for the six months ended June 30, 2026.
Net Income (Loss)
As a result of the foregoing, our net income was $32.62 million for the six months ended June 30, 2026, compared to $0.63 million of net loss for the same period of 2025.
Liquidity and Capital Resources
Our principal demands for liquidity are related to our efforts to increase sales and purchase inventory, and for expenditures related to sales distribution and general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to purchase of inventories and the expansion of our business, primarily through cash flow provided by operations and collections of accounts receivable.
We rely primarily on internally generated cash flow and available working capital to support growth. We may seek additional financing in the form of bank loans or other credit facilities or funds raised through offerings of our equity or debt, if and when we determine such offerings are required. As of June 30, 2026, we do not have any credit facilities. We believe that our current cash and cash equivalents and anticipated cash receipts from sales of products will be sufficient to meet our anticipated working capital requirements and capital expenditures for the next 12 months.
We had working capital of $45,308,911 at June 30, 2026, an increase of $35,918,955 from net working capital of $9,389,956 at December 31, 2025. The ratio of current assets to current liabilities was 28.80-to-1 at June 30, 2026.
The following is a summary of cash provided by or used in each of the indicated types of activities during the six months ended June 30, 2026 and 2025:
| 2026 | 2025 | |||||||
| Cash (used in) provided by: | ||||||||
| Operating activities | $ | (4,289,297 | ) | $ | (230,104 | ) | ||
| Investing activities | (13,103,890 | ) | - | |||||
| Financing activities | 45,298,256 | 481,274 | ||||||
Net cash used in operating activities was $4.29 million for the six months ended June 30, 2026, an increase in cash outflow by $4.06 million from $0.23 million of cash used in operating activities for the same period of 2025.
The increase in cash outflow was attributable primarily to (i) an increase in cash outflow of $0.75 million for accounts receivable to $0.75 million cash outflow for the six months ended June 30, 2026, from $623 cash inflow for the same period of 2025, such increase in cash outflow being mainly due to our new AI business customers purchased our service on credit; (ii) an decrease in cash inflow of $1.02 million for inventory to $0.23 million cash inflow for the six months ended June 30, 2026, from $1.24 million cash inflow for the same period of 2025, such increase in cash outflow being mainly due to we purchased more products from our suppliers due to we are ready for peak sales season for July and August 2026; (iii) an increase in cash outflow of $1.35 million for other current assets to $1.29 million cash outflow for the six months ended June 30, 2026, from $0.06 million cash inflow for the same period of 2025, such increase in cash outflow being mainly due to we made more prepayments and deposits to our service providers. The increase in operating cash outflow was partially offset by (i) increase in cash inflow of $0.72 million of accounts payable to cash inflow of $0.15 million for the six months ended June 30, 2026, from the accounts payable of cash outflow of $0.57 million for the same period of 2025, such increase in cash inflow being mainly due to purchase more products on credits; (ii) increase in cash inflow of $0.20 million of contract liabilities to cash inflow of $0.13 million for the six months ended June 30, 2026, from the contract liabilities of cash outflow of $0.07 million for the same period of 2025, such increase in cash inflow being primarily due to received more deposits from our customers; (iii) decrease in cash outflow of $0.55 million of accrued liabilities and other payables to cash outflow of $0.08 million for the six months ended June 30, 2026, from the accrued liabilities and other payables of cash outflow of $0.63 million for the same period of 2025, such increase in cash inflow being primarily due to that we delayed payments to our service provides.
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Net cash used in investing activities was $13.10 million for the six months ended June 30, 2026, an increase in cash outflow of $13.10 million from nil million of cash used in investing activities for the same period of 2025. We incurred cash outflow of $5.30 million to loan to a third party and $7.80 million to invest into the funds of Preamble Capital LLC.
Net cash provided by financing activities was $45.30 million for the six months ended June 30, 2026, compared to $0.48 million for the same period of 2025. During the six months ended June 30, 2026, we issued stocks to investors with the net proceeds of $45.71 million, while we paid off $0.40 million to loans from a shareholder. During the six months ended June 30, 2025, we sold one million shares of common stock with the proceeds of $0.50 million for our working capital and borrowed $0.20 million loan from a shareholder, while we paid off one of loans from shareholder by issued 434,000 shares of our common stocks which was equivalent in the value of $0.22 million.
As of June 30, 2026, we had gross accounts receivable of $3,192,518 of which $15,457 was not yet past due, $751,671 was less than 90 days past due and $2,425,390 was more than 90 days past due. We had an allowance for expected credit losses of $343. As of August 7, 2026, 0.99% of accounts receivable outstanding as of June 30, 2026 had been collected. As of August 7, 2026, all of our accounts receivable outstanding at December 31, 2025 had been collected.
As of June 30, 2026 and December 31, 2025, we had advances to suppliers of $73,924 and $313,924, respectively. These supplier prepayments are made for goods before we actually receive them.
For a new product, the normal lead time from new product R&D, prototype, and mass production to delivery of goods from our suppliers to us is approximately six to nine months after we make advance payments to our suppliers. For other products, the typical time is 4-6 months after our advance payment. We will consider the need for a reserve when and if a supplier fails to fulfill our orders within the time frame as stipulated in the purchase contracts.
As of August 7, 2026, $40,000 or 54% and $313,924 or 100% of our advances to suppliers outstanding at June 30, 2026 and December 31, 2025 had been delivered to us in the form of purchases of furniture, respectively.
Other Long-Term Liabilities
As of June 30, 2026 and December 31, 2025, we recorded long-term taxes payable of nil million, consisting of an income tax payable of nil, primarily arising from a one-time transition tax recognized in the fourth quarter of 2017 on our post-1986 foreign unremitted earnings, as ASC 740 specifies that tax positions for which the timing of the ultimate resolution is uncertain should be recognized as long-term liabilities.
We elected to pay the one-time transition tax over the eight years commencing April 2018.
On November 18, 2025, the Company entered into a Convertible Promissory Note Purchase Agreement (the “Agreement”) with Billiongold Holding Limited, a company incorporated under the law of Hong Kong (the “Purchaser”). Pursuant to the Agreement, the Company sold a Convertible Promissory Note to the Purchaser with a principal amount of $5,000,000 (the “Note”). The Note will mature on the date that is thirty-six (36) months from the date that the purchase price of the Note is paid to the Company (the “Maturity Date”). The Note bears interest at the rate of 6% per annum, which is payable on Maturity Date. Any outstanding principal and interest on the Note may be converted to the shares of common stock of the Company at the holder’s option at a conversion price of $7.80 per share at any time until the total outstanding balance of the Note is paid. The Note was sold to the Purchaser pursuant to an exemption from registration under Regulation S, promulgated under the Securities Act of 1933, as amended.
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Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.
We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders’ equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have evaluated, under the supervision of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of June 30, 2026. Based on this evaluation, our CEO and CFO concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as described above.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during or subsequent to the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time we are a party to various litigation matters incidental to the conduct of our business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.
Item 1A. Risk Factors
Not Applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 5. Other Information
Insider Trading Arrangements
During
the quarterly period covered by this report, none of the Company’s directors or executive officers
Item 6. Exhibits
EXHIBIT INDEX
† Filed herewith
‡ Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| XMAX INC. | ||
| (Registrant) | ||
| Date: August 14, 2026 | By: | /s/ Xiaohua Lu |
Xiaohua Lu Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 14, 2026 | /s/ Jeffery Chuang | |
Jeffery Chuang, Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |
| 59 |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Xiaohua Lu, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2026, of XMAX Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 14, 2026 | By: | /s/ Xiaohua Lu |
|
Xiaohua Lu, Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Jeffery Chuang, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2026, of XMAX Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 14, 2026 | By: | /s/ Jeffery Chuang |
| Jeffery Chuang | ||
| Chief Financial Officer | ||
|
(Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of XMAX Inc. (the “Company”) for the quarter ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Xiaohua Lu, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 14, 2026 | By: | /s/ Xiaohua Lu |
| Xiaohua Lu, Chief Executive Officer |
This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of XMAX Inc. (the “Company”) for the quarter ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffery Chuang, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 14, 2026 | By: | /s/ Jeffery Chuang |
|
Jeffery Chuang | ||
| Chief Financial Officer (Principal Financial Officer) |
This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.