XMax Inc 10-K for FY2025
XMax Inc. (XMAX)
About this 10-K
XMax Inc filed this 10-K on April 15, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $16.72M
- up 72.6% from $9.69M a year earlier
- Net loss
- $3.42M
- compared with a net loss of $5.56M a year earlier
- Diluted EPS
- -$0.17
- compared with -$1.48 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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As
of June 30, 2025, the registrant’s most recently completed second fiscal quarter, the aggregate market value of the common stock
held by non-affiliates of the registrant was approximately $
As of April 10, 2026, there were shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
| Auditor Firm ID: | 6907 | Auditor Name: | Enrome, LLP | Auditor Location: | Singapore |
XMAX INC.
Table of Contents
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NOTE ABOUT FORWARD-LOOKING STATEMENTS
This report contains 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, regarding our company that include, but are not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict.
These forward-looking statements involve various risks and uncertainties. Although we believe our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Our Business” and other sections in this report. You should read this report and the documents we refer to thoroughly with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this report include additional factors which could adversely impact our business and financial performance.
This report contains statistical data we obtained from various publicly available government publications and industry-specific third-party reports. Statistical data in these publications also include projections based on a number of assumptions. The markets for our products may not grow at the rate projected by market data, or at all. The failure of these markets to grow at the projected rates may have a material adverse effect on our business and the market price of our securities. In addition, the rapidly changing nature of our customers’ industries results in significant uncertainties in any projections or estimates relating to the growth prospects or future condition of our markets. Furthermore, if any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.
Unless otherwise indicated, information in this report concerning economic conditions and our industry is based on information from independent industry analysts and publications, as well as our estimates. Except where otherwise noted, our estimates are derived from publicly available information released by third party sources, as well as data from our internal research, and are based on such data and our knowledge of our industry, which we believe to be reasonable. None of the independent industry publication market data cited in this report was prepared on our or our affiliates’ behalf.
The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents we refer to in this report and have filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect.
As used in this report, “XMAX”, “XWIN”, “Nova LifeStyle”, “Nova,” the “Company,” “we,” “our” and similar terms refer to XMAX Inc. and its subsidiaries, unless the context indicates otherwise.
Our functional currency is the U.S. Dollar, or USD. See Note 2 of the consolidated financial statements included herein.
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PART I
Item 1. Business
Our Company
XMax Inc. (the “Company”), formerly known as Nova LifeStyle, Inc. and Stevens Resources, Inc, is a U.S.-headquartered innovative designer and 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 were incorporated in the State of Nevada on September 9, 2009. The Company’s products are marketed through wholesale and retail channels as well as various online platforms worldwide.
The Company’s family of brands includes Nova LifeStyle, Diamond Sofa (www.diamondsofa.com) and Nova Living.
Our business strength lies in our abilities to quickly adapt to changing market demand and stay ahead of the latest trends in modern furniture designs. Our customers principally consist of designers, distributors and retailers who cater to mid-level and high-end private label home furnishings that have little product overlap within our specific furnishings products or product lines. The Company is constantly seeking to integrate new sources of distribution and manufacturing that are aligned with our growth strategies, allowing us to continually focus on growing our customer base as well as driving the expansion of our overall distribution and manufacturing relationships worldwide, providing our customers with trendy furnishing solutions.
We generate the majority of our sales as a branding and marketing company with vertically integrated third-party manufacturing capabilities for global furniture distributors and large national retailers. We have established long term relationships with our worldwide customers by providing them with high quality, large scale and cost-effective sourcing solutions. Our worldwide logistics and delivery capabilities provide our customers with the flexibility to select from our extensive furniture collections tailored for their respective needs. Our experience marketing products to international customers have enabled us to fully integrate the supply scale, product delivery logistics, marketing efficiency and design expertise to address customer demand from established markets in North America, Central America, South America, Asia, and the Middle East.
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 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.
Reverse split
On December 18, 2019, the Company filed a Certificate of Change with the Secretary of State of Nevada with an effective date of December 20, 2019, 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, was effected. On May 22, 2023, the Company filed a Certificate of Change with the Nevada Secretary of State to effect another 1-for-5 reverse stock split, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock.
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.
There was no change in the par value of our common stock. All references to shares and per share data have been retroactively restated to reflect such splits.
Human Capital Resources
We understand that our success depends on our ability to attract, train and retain our employees. We strive to attract, recruit, and retain employees through competitive compensation and benefit programs, learning and development opportunities that support career growth and advancement opportunities, and employee engagement initiatives that foster a strong Company culture. In addition to cash compensation, we offer customary benefits in accordance with local regulatory requirements as well as stock options to our employees. We also recognize the importance of keeping our employees safe. In response to the COVID-19 pandemic, we implemented changes that we determined were in the best interest of our employees and have followed local government orders to prevent the spread of COVID-19. As of December 31, 2025, we had 22 full time employees, all based in the U.S. We believe that relations with our employees are satisfactory. We have no collective bargaining agreements with our employees.
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Our History
We are a U.S. holding company that operates through several wholly-owned subsidiaries. We design and market residential and commercial furniture products worldwide. Our subsidiaries include Nova Furniture Limited domiciled in the British Virgin Islands (“Nova BVI”), Diamond Bar Outdoors, Inc. domiciled in California (“Diamond Bar”), Nova Furniture Ltd. domiciled in Samoa (“Nova Samoa”) and its wholly owned subsidiaries Nova Living (M) SDN. BHD. domiciled in Malaysia (“Nova Malaysia”) and i Design Blockchain Technology, Inc. (“i Design”) under the laws of the State of California. We also have a wholly owned subsidiary Xmax Capital Ltd. (“Xmax Capital”) 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.
On April 24, 2013, we acquired all of the outstanding stock of Bright Swallow International Group Limited (“Bright Swallow”). On September 23, 2016, Nova Furniture, a wholly-owned subsidiary of the Company (the “Seller”), sold all of the outstanding equity interests in Nova Furniture (Dongguan) Co., Ltd. (“Nova Dongguan”), a company incorporated in China and a wholly owned subsidiary of the Seller, to an unrelated third party.
On December 7, 2017, we incorporated i Design under the laws of the State of California. The purpose of i Design is to build our own blockchain technology team, however, the business of i Design has not been developed and has had minimum operations to date. On December 12, 2019, Nova LifeStyle, Inc. acquired Nova Malaysia which was incorporated in Malaysia on July 26, 2019. Nova Malaysia was acquired to market and sell 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. Nova Malaysia ceased its business operations and in the process of de-registered with Malaysia government in October 2025.
On January 7, 2020, the Company transferred its entire interest in Bright Swallow to Y-Tone (Worldwide) Limited an unrelated third party.
Nova Furniture Macao Commercial Offshore Limited (“Nova Macao”) was organized under the laws of Macao on May 20, 2006 as a wholly owned subsidiary of Nova Furniture. On October 14, 2020, the Macao Trade and Investment Promotion Institute approved that Nova Macao’s offshore license became invalid under the order of Repeal of Legal Regime of the Offshore Services by Macao Special Administrative Region. Nova Macao was de-registrated and liquidated in January 2021 and its business was taken over by Nova HK.
On November 5, 2020, Nova LifeStyle, Inc. acquired Nova HK from unrelated third party 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. Nova HK had minimum operations in 2021. On February 15, 2022, the Company transferred its entire assets and business in Nova HK to Nova Malaysia. In February 2023, Nova HK was completed the process of de-registration and liquidation. Operations of Nova HK were reported as discontinued operations in the accompanying consolidated financial statements for all periods presented.
On September 24, 2025, the Company incorporate Xmax Capital. 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.
Our organizational structure as of December 31, 2025 is set forth in the diagram:
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Our Products
We design and market modern residential and commercial furniture in diverse markets worldwide. Our products feature urban and contemporary styles, combining comfort and functionality in matching furniture collections and upscale luxury pieces appealing to lifestyle-conscious middle and upper middle-income consumers. Many of our products are segments of multi-component furniture collections in distinctive design styles, attractively priced in the medium and upper-medium ranges. Our product lines feature upholstered, wood and metal-based furniture pieces. We classify our products by room, designation or series, such as living room, dining room, bedroom and home office series, and by category or product types such as sofas, chairs, dining tables, beds, entertainment consoles, cabinets and cupboards. Our largest selling product categories for the year ended December 31, 2025 were marbles slabs, sofas and coffee tables, which accounted for approximately 47%, 30% and 5% of sales , respectively. For the year ended December 31, 2024, our largest selling product categories were sofas, beds and coffee table, which accounted for approximately 50%, 13% and 8% of sales, respectively. Our products are manufactured primarily from medium-density fiberboard, or MDF board, and particleboard covered with veneers or lacquers and combined with other materials, including steel, glass, marble, leather, jade and fabrics.
Our product offerings consist of a mix of furnishings designed by us, and sourced from third party manufacturers that are supervised under our rigorous quality control processes. Through market research, customer feedback, and ongoing design development, we identify the latest trends and customer needs in target markets to develop new products, collections and brands. Our product collections are designed to appeal to consumer preferences in specific markets. We develop both individual furniture pieces and complete furniture collections that equip an entire home which feature matching furniture suites, providing convenient home furnishing options for lifestyle-conscious consumers.
We introduce new collections and launch new design styles at international furniture exhibitions or trade fairs. Our products are displayed in our showrooms. We further support our new product launches with product brochures and online marketing campaigns. Our staff collects customer feedback and collaborates with customers worldwide to design store and showroom layouts. In marketing materials, we highlight matching furniture collections by displaying complete and fully accessorized whole-room settings instead of individual furniture pieces. We believe that such in-store presentations provide convenient, one-stop solutions to customers, and thus incentivize clients to purchase an entire room of furniture from us instead of shopping for individual pieces offered by different brands or manufacturers. Our products are mainly designed by our own designers and we also used independent designers in the past for product design. Customer orders are filled by third party manufacturers under our direct quality control. We believe that our products feature superior materials, attractive appearances, superb functionalities and satisfying price points generally desired by today’s middle to upper middle-income consumers worldwide.
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International Markets
We have been selling products to the U.S., Canada, Honduras, Jamaica, Puerto Rico, Colombia, Mexico, Cayman Islands, Saudi Arabia, Kuwait, and Middle Eastern markets under the Diamond Sofa brand and sold our Jade Mats in Malaysia through Nova Malaysia. We believe that discretionary purchases of furniture by middle to upper middle-income consumers will continue to increase in the furniture markets worldwide. We also believe that furniture products that feature contemporary design styles such as ours will continue to attract significant customer demand.
In 2025, our products were sold in 9 countries worldwide, with North America as our principal international market. Sales to North America accounted for 52.1% and 97.4% of our total sales for 2025 and 2024, respectively. Sales to Hong Kong accounted for 47.4% and 0% for 2025 and 2024, respectively. Sales to other regions accounted for 0.5% and 2.6% of our total sales for 2025 and 2024, respectively. In 2023, via our subsidiary, Nova Malaysia, we marketed and sold high-end physiotherapeutic jade mats for use in therapy clinics, hospitality, and real estate projects in Malaysia. Due to the negative impact caused by COVID-19 in 2021 and 2022, we eventually sold the entire jade mats inventory for $2.00 million in liquidation sales in June 2023 and existed from Jade Mats business. As we continue to broaden our distribution network, increase direct sales and grow in the emerging markets, we believe that we are well positioned to respond to changing market conditions that will allow us to take advantage of any upturns in the global and local economies of the markets that we serve.
Our expansion in Malaysia with health line products was disrupted due to COVID-19. Our initial plan was to establish showrooms in which consumers can interact with our products. Through research, we found that consumers were becoming more self-aware about their health and were willing to improve their lifestyles. Our showrooms were stocked and ready for local consumers to visit, however, due to government regulations these operations have been suspended until quarantines and travel restrictions are lifted. In October 2021, the Order was lifted for people who are fully vaccinated and our store has reopened since. We started the online sales of our jade mats products in Malaysia since 2021. In April 2022, Malaysia reopened the border for foreign visitors. In June 2023, everything is back to normal in Malaysia. Due to the negative impact caused by COVID-19 from 2020 to 2022, the Company eventually sold the entire jade mats inventory for $2.00 million in liquidation sales in June 2023 and existed from Jade Mats business. Nova Malaysia ceased its business operations and in the process of de-registered with Malaysia government in October 2025.
The furniture wholesale business faces several risks that can impact its operations and profitability. Some common risks include: (i) Economic Instability: Fluctuations in the economy, slow down in real estate market and high interest rate can affect consumer spending on furniture, leading to decreased demand for products; (ii) Competition: Intense competition from other wholesalers, retailers, and online platforms can impact market share and pricing strategies; (iii) Supply Chain Disruptions: Interruptions in the supply chain, such as delays in shipping or shortages of raw materials or finished products, can hinder production and delivery schedules; (iv) Changing Consumer Preferences: Shifts in consumer preferences towards sustainable, trendy, or customized furniture may require wholesalers to adapt their product offerings; (v) Seasonal Demand: The furniture industry often experiences seasonal peaks and troughs, which can impact cash flow and inventory management; (vi) Tariff and Regulatory Challenges: Increase of import tariff for furniture products and compliance with regulations related to product safety, environmental standards, and labor practices can add complexity and costs to operations.
In order to mitigate these risks, we will continue to diversify our product range, build strong relationships with suppliers, closely monitor market trends and changes in tariffs and regulations, invest in technology for efficiency, and maintain a robust risk management strategy.
Our global logistics and delivery capabilities provide our customers with the flexibility to select from our extensive furniture collections to address their respective needs. We design and supply our products under our own brands. We also design and ship products for other major brands as their OEM designer or supplier. We offer a wide selection of stand-alone furniture pieces across a variety of product categories and approximately over 45 products developed exclusively for the international markets. We also sell products under the Diamond Sofa brand to distributors and retailers in North America, South America, Asia and Middle East and to end-user U.S. consumers our own online orders or through third-party shopping portals. Reflecting market demand, our research and development team works closely with customers to timely modify our existing product designs. We also offer custom-designed styles for specific market segments.
Sales and Marketing
Our sales and marketing strategies target middle and upper middle class, urban consumers, including: (1) direct sales to the U.S. and international customers; (2) internet sales and online marketing campaigns; and (3) participation in exhibitions and trade shows.
We diversify our customer base by increasing direct sales to a broad range of retailers and chain stores across the U.S. and international markets. We plan to continue to expand our direct sales and marketing efforts in North America, and in particular the U.S., which historically is the largest market worldwide for imported furniture. We intend to expand the “Diamond Sofa” brand and introduce new brands for direct sales in the U.S. and international markets while continuing to offer custom-made products under private label.
Diamond Bar also currently sells products under the Diamond Sofa brand in the U.S. through third party shopping portals, shipping orders received online directly to the end customer. We believe that our planned direct-to-consumer online sales and marketing strategies will increase our sales in the U.S. by building our brand awareness and acting as an effective advertising vehicle. We also support new product collections and brand launches with print and online advertising campaigns, participation in furniture exhibitions and by offering product brochures and samples. We provide samples and brochures of new products for international markets to distributors and buyers, as is common in the furniture industry.
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We gain new customers by attending many international furniture trade shows throughout the years. During these events, we introduce new product offerings and launch new design collections. We believe this marketing process helps us to develop and detect the latest-trends in the marketplace, allowing us to better understand the challenges and opportunities facing distributors and buyers with whom we have long–standing customer relationships. We exhibit new products under the “Diamond Sofa” brand during the Las Vegas Market (U.S.) and the High Point Market (U.S.) trade shows. Internationally, we participate in trade fairs in collaboration with our customers. We plan to expand our business in the Middle East by attending several furniture exhibitions in those markets, such as trade show in Dubai. To highlight our latest design collections, we maintain year-round showrooms at the Company’s headquarters in California as well as the High Point Market and Las Vegas Market.
In 2023, via our subsidiary Nova Malaysia, we sold our entire high-end physiotherapeutic jade mats to an unrelated party and existed the jade mats business in Malaysia. Nova Malaysia ceased its business operations and in the process of de-registered with Malaysia government in October 2025.
Suppliers and Manufacturers
We source finished goods from third-party manufacturers to fulfill orders placed by customers through Diamond Bar and Nova Malaysia for the U.S. and international markets. Two of our principal suppliers of finished goods in 2025 accounted for approximately 25% of our total purchases from operations for 2025. By maintaining relationships with multiple suppliers, generally we benefit from a more stable supply chain and better pricing. Under ordinary circumstances, if a change of suppliers is necessary, we believe that we can quickly fulfill our requirements from other suppliers without interruptions in order fulfillment. We monitor our suppliers’ ability to meet our product needs and we participate in quality assurance activities to reinforce our high-quality standards. Our third-party manufacturing contracts are generally of annual or shorter term durations. We issue production orders to manufacturers based on individual purchase orders. Our manufacturing relationships are non-exclusive, and we are permitted to procure products from other sources at our discretion. None of our manufacturing contracts include production volume or purchase commitments on the part of either party. Our third-party manufacturers are responsible for sourcing raw materials, agreeing to produce parts and finished products to our specifications. We hold our suppliers to high quality standards and delivery deadlines. Our quality control procedures may extend to stringent requirements for raw material suppliers.
Customers
Our target end customer is the middle and upper middle-income consumer of residential and commercial furniture. In the U.S. and international markets, our sales principally are to furniture distributors and retailers who in turn offer our products under their own brands or under our Diamond Sofa brand. One customer accounted for greater than 10% of our total sales in 2025 and no customer accounted for greater than 10% of our total sales in 2024, respectively. We will increase direct sales to retailers and chain stores worldwide as we continue to diversify our customer base from global furniture distributors.
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We are focusing on establishing and growing long-term relationships with our customers. We believe that the majority of our customers view us as a strategic long-term supplier and value the quality of our products, our timely delivery and design capabilities. We generally negotiate renewable supplier agreements with firm pricing on our products, typically for a term of one year, as is customary in the furniture industry, with individual orders made on standard purchase orders. In 2025, our products were sold in 9 countries worldwide, with North America as our principal international market. Sales to North America accounted for 52.1% and 97.4% of our total sales for 2025 and 2024, respectively. Sales to Hong Kong accounted for 47.4% and 0% for 2025 and 2024, respectively. Sales to other regions accounted for 0.5% and 2.6% of our total sales for 2025 and 2024, respectively. We expect that a majority of our revenues will continue to come from our sales to the U.S. Diamond Bar has driven expansion of our sales to the U.S., Mexico, and South America through Diamond Bar’s longstanding customer relationships and distribution capabilities. Diamond Bar’s revenues accounted for 52.6% and 100% of our total sales for 2025 and 2024, respectively, and Nova Malaysia’s revenues accounted for 0.0% of our total sales for 2025 and 2024, respectively. In addition, we anticipate increasing internet sales under the Diamond Sofa brand through third-party shopping portals. We believe that as we expand our broad network of distributors and increase direct sales, we will be better positioned to capitalize on emerging market trends.
We typically used to experience stronger fourth calendar quarters as our product sales are subject to the seasonality and fluctuations typical of the furniture industry. This industry-based seasonality was generally caused by shipping lead-times to international markets combined with the real estate market slowdown and decrease in furniture consumption commonly experienced during the summer months in the Northern Hemisphere markets in which the majority of our customers are located and our products sell at retail. We believe that consumer demand for furniture generally reflects sensitivity to overall economic conditions, including, but not limited to, tariffs, unemployment rates, housing market conditions and consumer confidence.
Competition
The furniture industry is large and highly competitive. The industry consists of many manufacturers, distributors and retailers, none of which dominates the fragmented and diverse market. Our products principally compete in the U.S., Canada, Cayman Island, Costa Rica, Honduras, Jamica, Kazakhstan, Mexico and Saidi Arabia. The primary competitive factors in these markets for our products and target consumers are price, quality, style, marketing, functionality and availability.
In the U.S. and international markets, we compete against other furniture distributors and wholesalers which are mostly located in China and other Southeast Asian countries. We also compete against traditional distributors in North America and Europe. We believe that we have significant competitive advantages over North American and European distributors due to our superb customer service and a history of prompt delivery of high-quality products. Our contemporary product designs have styles and functionality that are better than, or at least comparable to, those offered by our higher-priced competitors. Our design team closely coordinates with our sales and marketing staff to include customer feedback as part of their ongoing R&D improvement process, thus allows the Company to develop and timely modify products to meet the changing stylistic and functional demands from our worldwide customers. We believe that our decades of product experience and proven performance record offer competitive edges over many other suppliers. In addition to our design and logistical capabilities, we believe that our experience from sourcing custom-made products for distributors presents significant benefits to our customers.
Trade and Tariff
Since February 1, 2025, President Trump issued executive orders imposing additional tariff on furniture products imported from China and India which are currently between 27% and 70%, 0% and 50%, respectively. While previous tariffs on Chinese and India goods and modifications to trade agreements have resulted in a material impact on our business and where we purchase our finished products, these new tariffs or any additional actions, such as “reciprocal” tariffs on U.S. trading partners to address trade imbalances, could negatively impact our ability and the ability of our third-party vendors and suppliers to source products from foreign jurisdictions, which could lead to an increase in the cost of goods and adversely affect the Company’s profitability. Tariffs passed on to consumers through higher prices can also negatively impact consumer confidence and discretionary spending.
We continue to evaluate the impact of currently effective tariffs, including potential future retaliatory tariffs, as well as other recent changes in foreign trade policy and the U.S. Administration on our supply chain, costs, sales and profitability, and are working through strategies to mitigate such impact, including reviewing sourcing options and working with our vendors and merchants. At this time, it is unknown how long U.S. tariffs on Chinese goods will remain in effect or whether additional tariffs will be imposed. Depending upon their duration and implementation, as well as our ability to mitigate their impact, these changes in foreign trade policy and any recently enacted, proposed and future tariffs on products imported by us from China, as well as general uncertainty in the tariff environment, could negatively impact our business, results of operations and liquidity if they seriously disrupt the movement of products through our supply chain or increase their cost.
Environmental and Regulatory Matters
Our operations are subject to various laws and regulations both domestically and abroad. In the U.S., federal, state and local regulations impose standards on our workplace and our relationship with the environment. For example, the U.S. Environmental Protection Agency, Occupational Safety and Health Administration and other federal agencies have the authority to promulgate regulations that may impact our operations. In particular, we are subject to legislation placing restrictions on our generation, emission, treatment, storage and disposal of materials, substances and wastes. Such legislation includes: the Toxic Substances Control Act; the Resource Conservation and Recovery Act; the Clean Air Act; the Clean Water Act; the Safe Drinking Water Act; and the Comprehensive Environmental Response and the Compensation and Liability Act (also known as Superfund). We are also subject to the requirements of the Consumer Product Safety Commission and the Federal Trade Commission, in addition to regulations concerning employee health and safety matters. We believe the Company has complied with the relevant federal, state, local and international requirements for environmental protection.
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Intellectual Property
We rely on the trademark protection laws in the U.S. to protect our intellectual property and maintain our competitive position in the marketplace. The Company and our subsidiaries currently hold two trademarks registered in the U.S. related to the “Diamond Sofa” brand and one trademark registered in U.S. related to the “Xmax”. In addition, we have registered and maintained numerous internet domain names related to our business, including “novalifestyle.com”, “novaliving.com.my” and “diamondsofa.com.”
Research and Development
We believe that new product designs are important to our continued success. We actively seek to protect our product designs and brand names under the trademark protection laws in the U.S., but the copying of a product’s appearance is a common and ongoing issue in the furniture industry as manufacturers seek to capitalize on popular designs and features by copying those of their competitors and making subtle changes to avoid infringement claims. To remain competitive, we believe that we must constantly innovate to stay ahead of competitors. We have developed a design process that enables us to better manage the short product life cycles for furniture designs by anticipating and responding quickly to changing consumer preferences. Ordinarily, we strive to attend furniture exhibitions worldwide, conduct market research and solicit customer feedback to help us identify new trends and customer needs in our target markets. We then incorporate customer feedback into new product designs. We normally introduce new product collections annually for the U.S. and international markets. We anticipate introducing new products under the “Diamond Sofa” brand on a quarterly basis for the U.S. market. At least annually, we assess the marketing results for new designs in order to decide whether to continue with a particular line.
We use in-house designers and computer-aided modeling systems to generate design and related development work. We have used independent designers in the past for product design, from which we built prototype furniture pieces for refinement and testing. During 2024, Nova Malaysia spent $2.00 million on developing Virtual and Augmented reality software and AI system for potential consulting business. 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. In 2025 and 2024, we invested $0 million and $2.00 million, respectively, on research and development expense. We may increase future investments in R&D based on our growth needs.
Furniture Industry Regulations and Standards
We and our products are subject to U.S. and international regulations related to the furniture industry.
Our products are subject to the mandatory and voluntary furniture test standards of the U.S. and international markets in which our products are distributed to end consumers, including those developed by the American National Standards Institute, or ANSI, Business and Institutional Furniture Manufacturer’s Association, or BIFMA, ASTM International, California Air Resources Board, or CARB, Furniture Industry Research Association, or FIRA, and the International Organization for Standardization, or ISO. These environmental, ecological and formaldehyde emission standards and source of origin labeling requirements are national or international, with the U.S. and European Union typically having the strictest standards for their markets. We source products from third party manufacturers and we rely on them to meet all local manufacturing standards.
Employees
As of December 31, 2025, we had 22 full time employees worldwide. All were in our U.S. corporate office. We believe that relations with our employees are satisfactory. We have no collective bargaining agreements with our employees.
Item 1A. Risk Factors
Our business and an investment in our securities are subject to a variety of risks. The following risk factors describe the most significant events, facts or circumstances that could have a material adverse effect upon our business, financial condition, results of operations, ability to implement our business plan and the market price for our securities. Additional risks and uncertainties that presently are not considered material or are not known to us, and therefore are not mentioned herein, may impair our business operations. Many of these events are outside of our control. If any of these risks actually occurs, our business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our common stock could decline and investors in our common stock could lose all or part of their investment.
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Risks Related to Our Business
Changes in economic conditions in the industries and markets served by our customers could adversely affect demand for our products.
The furniture industry is subject to cyclical variations in the global economy and to uncertainty regarding future economic prospects. Our business is affected by the number of orders we are able to secure from our customers, which is determined by the level of our customers’ business activity. Our customers’ level of business activity is in turn determined by the level of consumer spending in the markets our customers serve. Economic downturns could affect discretionary consumer spending habits by decreasing the overall demand for residential and commercial furniture. Any significant or prolonged decline of the economy or inflation in U.S., Malaysia, China or other international markets in which our products are sold will affect disposable income and spending by consumers in these markets, and may lead to a decrease in demand for our products. To the extent that decrease in demand for consumer products translates into a decline in the demand for residential and commercial furniture, our sales and financial performance could be adversely affected. Any economic downturn also could negatively impact our primary customers, furniture wholesalers, distributors and retailers, possibly resulting in a decrease in our sales or earnings. Changes in interest rates, consumer confidence, new housing starts, existing home sales, inflation, the availability of consumer credit，increase of tariff and geopolitical factors could have particularly significant effects on our consolidated financial condition, results of operations and cash flows. Any decline in economic activity and conditions in the industries and markets served by our customers and in which we operate may reduce demand for our products and could adversely affect our financial condition and results of operations. The COVID-19 pandemic materially adversely impacted the global economy and cause interruption of supply chain which in turn adversely affected our business operation and financial results during the outbreaks. The international trade disputes, trade policy changes or tariffs and other import-related taxes, fees and controls would significantly adversely impact the cost of, demand for, and profitability of our business in the U.S. market.
We historically have derived a substantial part of our sales from a limited number of customers. If we lose any of these customers, or any of these customers reduce the amount of business they do with us, our sales may be adversely affected.
Historically, a substantial part of our sales was attributed to a limited number of customers. But we had a customer accounted for greater than 10% of our total sales in 2025 and no customer accounted for greater than 10% of our total sales in 2024. If the demand for our products decreases in one or more of the markets supplied by our largest customers, or if there are any material social or regulatory changes in these markets, our sales could decline and we could lose market share, any of which could materially harm our business. We do not foresee relying on these same customers for sales generation as we expand our business to increase our internet sales and direct sales to the U.S. and other international markets. We cannot assure you, however, that we will be able to successfully implement these plans.
Our decision to move away from low margin products and to eliminate customers who generate low margin sales and that have slow payment histories could result in a decrease in our future sales and earnings.
As we implement our plan to transition to high profit margin products and fast paying clients, we cannot assure that the transition will be successful and that we will eventually develop enough new business to make up the loss of sales from the existing low margin products and slow paying clients. If we are unable to develop enough new clients for our high profit margin products, our sales and net income will be negatively impacted.
Our planned investments and expansion into AI software and hardware development, cloud and GPU computing infrastructure, AI model access and orchestration, and enterprise-focused AI agent deployment involve significant risks and uncertainties that could adversely affect our business, financial condition, results of operations, and cash flows.
We intend to allocate substantial capital and management attention to building and operating AI capabilities, including developing and acquiring AI software and hardware, securing and managing cloud and GPU compute infrastructure, enabling access to and orchestration of third-party and proprietary AI models, and deploying enterprise-grade AI agents. These initiatives are nascent, rapidly evolving, and highly competitive, and their success depends on factors within and outside our control. Among other things, we may not achieve anticipated adoption, performance, or cost profiles; our offerings may fail to meet customer expectations or regulatory requirements; and we may be unable to scale reliably or economically.
Developing and operating AI systems is capital- and compute-intensive. Access to advanced GPUs, AI accelerators, networking components, and associated datacenter capacity is limited and volatile, subject to supply constraints, long lead times, export controls, and dependence on a small number of suppliers and cloud providers. Compute and energy costs may increase materially, and we may be required to make non-cancelable commitments for capacity that exceed demand or become uneconomic. If we cannot secure sufficient, affordable infrastructure, or if our suppliers or cloud partners experience delays, outages, or performance issues, our product roadmaps and customer commitments could be impaired.
AI activities raise heightened cybersecurity, privacy, and safety risks. Our systems may process sensitive personal, financial, or proprietary information. Prompt injection, data exfiltration, model inversion, and other novel attack vectors could compromise confidentiality, integrity, or availability. Any breach, misuse of data, or failure to meet our contractual, privacy, or security commitments could result in regulatory investigations, penalties, litigation, remediation costs, loss of business, and reputational damage.
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The legal and regulatory landscape for AI is rapidly evolving and uncertain. Emerging or changing laws, regulations, standards, and governmental guidance—covering, for example, automated decision-making, transparency, safety evaluations, data protection, model governance, export controls, and sector-specific obligations—could require costly changes to our products and processes, restrict features or use cases, delay deployments, or limit access to models, datasets, or compute. We may need to implement additional controls (such as human-in-the-loop review, content filtering, auditability, and recordkeeping), obtain certifications, or modify contractual terms, each of which could increase costs and reduce margins.
We will depend on third-party technologies and partners. Our offerings may rely on external foundation models, open-source components, model hubs, APIs, datasets, and cloud platforms under licenses and contracts that can change or be terminated. Adverse changes in terms, pricing, rate limits, availability, or acceptable-use policies; discontinuation of models or services; or security or performance failures by third parties may disrupt our services, increase our costs, or necessitate re-engineering. Use of open-source software carries risks of restrictive license interpretations, required disclosures, or claims of non-compliance.
AI hardware development and systems integration pose execution and obsolescence risks. Designing, manufacturing, qualifying, and supporting AI hardware (including accelerators and edge devices) require specialized expertise, long development cycles, and significant working capital. Rapid advances in architectures and interconnects can render designs obsolete before we achieve scale. Manufacturing defects, yield issues, supply interruptions, or warranty claims could increase costs and delay revenue.
Enterprise adoption may be slower or more costly than expected. Prospective customers often require extended pilots, bespoke integrations, on-premises or private cloud deployments, rigorous security and compliance reviews, and robust service-level commitments. These requirements can lengthen sales cycles, increase upfront costs, and concentrate revenue in a limited number of large customers, heightening renewal and collection risks. If we cannot demonstrate clear return on investment, accuracy, safety, and compliance, customers may reduce scope or defer purchases.
Our AI initiatives require specialized talent. Competition for machine learning researchers, data scientists, AI engineers, safety and security specialists, and hardware architects is intense and compensation is increasing. Failure to attract and retain key personnel, or to effectively manage ethical, safety, and governance considerations, could impair our ability to innovate and operate responsibly.
We may face intellectual property claims and content-related liabilities. Training or operating models on data to which we lack sufficient rights, or outputs alleged to infringe or misappropriate third-party IP or publicity rights, could lead to claims, injunctions, damages, or requirements to implement costly filtering, indemnities, or content controls. Content generated by or facilitated through our systems may be alleged to be defamatory, offensive, or otherwise unlawful, potentially giving rise to regulatory scrutiny or private litigation.
If our AI investments do not generate sufficient revenue, margins, or cash flows, or if we are required to materially increase spending to meet reliability, safety, compliance, or infrastructure needs, our financial results could be adversely affected. We may incur impairment charges for capitalized hardware or intangibles, fail to achieve expected utilization of committed compute capacity, or experience dilution from additional financing. Any of the foregoing could materially and adversely affect our business, results of operations, and prospects.
If we lose our key personnel, or are unable to attract and retain additional qualified personnel, the quality of our services may decline and our business may be adversely affected.
We rely heavily on the expertise, experience and continued services of our senior management, including our Chief Executive Officer and Chief Financial Officer. Loss of their services could adversely affect our ability to achieve our business objectives. Our executive officers are key factors in our success at establishing relationships within the furniture industry in the U.S. and international market and capital market because of their extensive industry and financial experience. The continued development of our business depends upon their continued employment. We have entered into employment agreements with our Chief Executive Officer and Chief Financial Officer that include provisions for non-competition and confidentiality.
We believe our future success will depend upon our ability to retain key employees and our ability to attract and retain other skilled personnel. We cannot guarantee that any employee will remain employed by us for any period of time or that we will be able to attract, train or retain qualified personnel in the future. Such loss of personnel could have a material adverse effect on our business and company. Furthermore, we will need to employ additional personnel to expand our business. Qualified employees are in great demand and may be unavailable in the time frame required to satisfy our customers’ requirements. There is no assurance we will be able to attract and retain sufficient numbers of highly skilled employees in the future. The loss of personnel or our inability to hire or retain sufficient personnel at competitive rates could impair the growth of our business.
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We may not be able to keep pace with competition in our industry, which could adversely affect our market share and result in a decrease in our future sales and earnings.
The furniture industries in the U.S. and international markets are very competitive and fragmented. Our business is subject to risks associated with competition from new or existing industry participants who may have more resources and better access to capital. Many of our competitors and potential competitors may have substantially greater financial and government support, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the industry than we do. Among other things, these industry participants compete with us based upon price, quality, style, functionality and availability. We cannot be sure we will have the resources or expertise to compete successfully in the future. Some of our competitors may also be able to provide customers with additional benefits at lower overall costs to increase market share. We cannot be sure we will be able to match cost reductions by our competitors or that we will be able to succeed in the face of current or future competition. Also, due to the large number of competitors and their wide range of product offerings, we may not be able to continue to differentiate our products through value, styling or functionality from those of our competitors. In addition, some of our customers are also performing more manufacturing services themselves. We may face competition from our customers as they seek to become more vertically integrated. As a result, we are continually subject to the risk of losing market share, which may lower our sales and earnings.
We will face different market dynamics and competition as we develop new products to expand our presence in our target markets. In some markets, our future competitors may have greater brand recognition and broader distribution than we currently enjoy. We may not be as successful as our competitors in generating revenues in those markets due to the lack of recognition of our brands, lack of customer acceptance, lack of product quality history and other factors. As a result, any new expansion efforts could be more costly and less profitable than our efforts in our existing markets. If we are not as successful as our competitors are in our target markets, our sales could decline, our margins could be impacted negatively and we could lose market share, any of which could materially harm our business.
We may lose U.S. market share due to competition and our dependence on production facilities located outside the U.S., which would result in a decrease in our future sales and earnings.
We compete in the U.S. market principally through our sales under the Diamond Sofa brand. The furniture industry in the U.S. is very competitive and fragmented. We compete with many domestic U.S. and international furniture sources, including national department stores, regional or independent specialty stores, dedicated franchises of furniture manufacturers and retailers marketing products through catalogs and over the internet. There are few barriers to entry in the U.S. furniture market, and new competitors may enter this market at any time. Some of our competitors have greater financial resources than we have and often offer extensively advertised and well-recognized branded products. We may not be able to meet price competition or otherwise respond to competitive pressures in the U.S. market. We also may not be able to continue to differentiate our products from those of our competitors in the U.S. through value, styling and functionality because of the large number of competitors and their wide range of product offerings. Furthermore, some large furniture retailers in the U.S. are sourcing products directly from furniture manufacturers located in China and other Southeast Asian countries instead of through distributors like us. Over time, this practice may expand to smaller retailers in the U.S. Accordingly, we are continually subject to the risk of losing U.S. market share, which may decrease our future sales and earnings. Because we source products from third party manufacturers that are located outside the U.S. and we are subject to risks caused by disruption of international transportation such as COVID-19 and other health pandemics as well as the increase of tariffs imposed by the U.S. customs. We might lose business and our reputation might be damaged if there is delay of delivery and shipment from our suppliers.
Failure to anticipate or timely respond to changes in fashion and consumer preferences could adversely impact our business.
Furniture is a styled product and is subject to rapidly changing fashion trends and consumer preferences, as well as to increasingly shorter product life cycles. We believe our past performance has been based on, and our future success will depend, in part, upon our ability to continue to improve our existing products through product innovation and to develop, market and produce new products. We cannot assure you that we will be successful in introducing, marketing and producing any new products or product innovations, or that we will develop and introduce in a timely manner innovations in our existing products that satisfy customer needs or achieve market acceptance. Our success also depends upon our ability to anticipate and respond in a timely manner to fashion trends related to residential and commercial furniture. If we fail to identify and respond to these changes, our sales could decline and we could lose market share, any of which could materially harm our business.
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We may need additional capital to execute our business plan and fund operations and may not be able to obtain such capital on acceptable terms or at all.
In connection with the development and expansion of our business, we may incur significant capital and operational expenses. We believe that we can increase our sales and net income by implementing a growth strategy that focuses on (i) increasing online sales and (ii) diversifying our international sales. We plan to increase and diversify our sales to the U.S. and international markets by establishing new brands for the international markets and to increase our online sales presence.
In the event that available funds are not sufficient to meet our operating needs and our plans for expansion, we intend to pursue alternative financing arrangements, including additional bank loans based on our good credit rating or funds raised through additional offerings of our equity or debt, if and when we determine such offerings are required. Our ability to obtain additional capital on acceptable terms or at all is subject to a variety of uncertainties, including:
| ● | Investors’ perceptions of, and demand for, companies in our industry; |
| ● | Investors’ perceptions of, and demand for, companies sourcing from China and other Asian countries; |
| ● | Conditions of the U.S. and other capital markets in which we may seek to raise funds; |
| ● | Our future results of operations, financial condition and cash flows; |
| ● | Governmental regulation of foreign investment in companies in particular countries; |
| ● | Economic, political and other conditions in the U.S., China, and other countries; and |
| ● | Governmental policies relating to foreign currency. |
There is no assurance we will be successful in locating a suitable financing transaction in a timely fashion or at all. In addition, there is no assurance we will obtain the capital we require by any other means. Future financings through equity investments are likely to be dilutive to our existing shareholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly-issued securities may include preferences or superior voting rights, be combined with the issuance of warrants or other derivative securities, which may have additional dilutive effects. Furthermore, we may incur substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition. If we cannot raise additional funds on favorable terms or at all, we may not be able to carry out all or parts of our strategy to maintain our growth and competitiveness.
We may experience material disruptions to our ability to acquire sufficient inventory from third-party suppliers that could result in material delays, quality control issues, increased costs and loss of business opportunities, which may negatively impact our sales and financial results.
We rely upon our third-party suppliers to produce our products and maintain sufficient inventory to meet customer demand. A material disruption at our suppliers’ manufacturing facilities could prevent us from meeting customer demand, reduce our sales and negatively impact our financial results. We may also experience quality control issues as we seek out new suppliers or are forced to contract with new suppliers to meet customer demand. Any such material disruption may prevent us from shipping our products on a timely basis, reduce our sales and market share and negatively impact our financial results. Our third-party supplier contracts are generally of annual or shorter duration, or manufactured products are sourced on the basis of individual purchase orders. There is no assurance that we will be able to maintain our current relationships with these parties or, if necessary, establish future arrangements with other third-party suppliers on commercially reasonable terms. Further, while we maintain an active quality control program, we cannot assure that their manufacturing and quality control processes will be maintained at a level sufficient to meet our inventory needs or prevent the inadvertent sale of substandard products. While we believe that products manufactured by our current third-party suppliers could generally be procured from alternative sources, temporary or permanent loss of services from a significant manufacturer could cause disruption in our supply chain and operations.
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Our dependence on foreign suppliers subject us to a variety of risks and uncertainties that could impact our operations and financial results.
In 2025 and 2024, the majority of our products were purchased from foreign suppliers and manufacturers, predominantly in Asia. Our dependence on foreign suppliers means that we may be affected by changes in the value of the U.S. dollar relative to other foreign currencies. For example, any upward valuation in the Chinese yuan or any other foreign currency against the U.S. dollar may result in higher costs to us for those goods. Declines in foreign currencies and currency exchange rates might negatively affect the profitability and business prospects of one or more of our foreign suppliers. This, in turn, might cause such foreign vendors to demand higher prices for products in their effort to offset any lost profits associated with any currency devaluation, delay product shipments to us, or discontinue selling to us, any of which could ultimately reduce our sales or increase our costs.
We, and our foreign suppliers, are also subject to other risks and uncertainties associated with changing economic and political conditions worldwide. These risks and uncertainties include import duties and quotas, compliance with anti-dumping regulations, port congestion, supply chain disruption, work stoppages, economic uncertainties and adverse economic conditions (including inflation and recession), government regulations, employment and labor matters, wars and fears of war, political unrest, natural disasters, public health issues, regulations to address climate change and other trade restrictions. We cannot predict whether any of the countries from which our raw materials or products are sourced, or in which our products are currently manufactured or may be manufactured in the future, will be subject to trade restrictions imposed by the U.S. or foreign governments or the likelihood, type or effect of any such restrictions. Any event causing a disruption or delay of imports from foreign suppliers, including labor disputes resulting in work disruption, the imposition of additional import restrictions, restrictions on the transfer of funds and/or increased tariffs or quotas, or both, could increase the cost, reduce the supply of merchandise available to us, or result in excess inventory if merchandise is received after the planned or appropriate selling season, all of which could adversely affect our business, financial condition and operating results.
We depend on vendors and suppliers outside the U.S. Our business has been and could in the future continue to be affected by increase of tariff associated with our products sourced by foreign countries.
We depend on vendors for timely and efficient access to products we sell. We source our products from manufacturers located outside the U.S., primarily Asia. Since 2017, the U.S. and China have been engaged in a trade dispute that has involved a number of actions against China including the imposition of tariffs on Chinese imports. On February 1, 2025, Since February 1, 2025, President Trump issued executive orders imposing additional tariff on furniture products imported from China which is currently between 27% and 70%. The previous tariffs on products from Chinese have resulted in a material impact on our business and results of operations, and we have switched to source certain products from the suppliers in other Asia countries than China, these new tariffs or any additional actions, such as “reciprocal” tariffs on U.S. trading partners to address trade imbalances, could negatively impact our ability and the ability of our third-party vendors and suppliers to source products from foreign jurisdictions, which could lead to an increase in the cost of goods and adversely affect the Company’s profitability. Tariffs passed on to consumers through higher prices can also negatively impact consumer confidence and discretionary spending.
We continue to evaluate the impact of currently effective tariffs as well as other recent changes in foreign trade policy and the U.S. Administration on our supply chain, costs, sales and profitability, and are working through strategies to mitigate such impact, including reviewing sourcing options and working with our vendors and suppliers. At this time, it is unknown how long U.S. tariffs on Chinese goods will remain in effect or whether additional tariffs will be imposed. Depending upon their duration and implementation, as well as our ability to mitigate their impact, these changes in foreign trade policy and any recently enacted, proposed and future tariffs on products imported by us from China, as well as general uncertainty in the tariff environment, could negatively impact our business, results of operations and liquidity if they seriously disrupt the movement of products through our supply chain or increase their cost.
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Additional changes in the U.S. tax regime or in how U.S. corporations are taxed on foreign earnings, including changes in how existing tax laws are interpreted or enforced, could adversely affect our business, financial condition or results of operations.
We are also subject to regular reviews, examinations and audits by the IRS and other taxing authorities with respect to income and non-income based taxes both within and outside the United States. Economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult and the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in an adverse impact on our business, financial condition or results of operations. In addition, in connection with the Organization for Economic Co-operation and Development Base Erosion and Profit Shifting project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries.
We are subject to warranty claims for our products, which could result in unexpected expense.
Many of our products carry warranties for defects in quality and workmanship. Historically, the amount for return of products, the discount provided to the customers due to defects and cost for the replacement parts has been immaterial. However, we may experience significant expense as the result of future product quality issues, product recalls or product liability claims which may have a material adverse effect on our business. The actual costs of servicing future warranty claims may exceed our expectations and have a material adverse effect on our results of operations, financial condition and cash flows.
We are subject to periodic litigation, product liability risk and other regulatory proceedings, which could result in unexpected expense of time and resources.
From time to time, we may be a defendant in lawsuits and regulatory actions relating to our business. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome could have a material adverse effect on our business, financial condition and results of operations. In addition, any significant litigation, regardless of its merits, could divert management’s attention from our operations and may result in substantial legal costs. The Company has settled securities class action case and derivatives cases in early 2025, details See Item 3 Legal Proceedings. While the Company believes it has adequate defenses, the defense of those cases are costly and could significantly divert management attention from its business.
We may not be able to protect our product designs and other proprietary rights adequately, which could adversely affect our competitive position and reduce the value of our products and brands, and litigation to protect our intellectual property rights may be costly.
We attempt to strengthen and differentiate our product portfolio by developing new and innovative brands and product designs and functionality. As a result, our trademarks and other intellectual property rights are important assets to our business. Our success will depend in part on our ability to obtain and protect our products, methods, processes and other technologies, to preserve our trade secrets, and to operate without infringing on the proprietary rights of third parties in China, the U.S. and other international markets. Despite our efforts, any of the following may reduce the value of our owned and used intellectual property:
| ● | Issued and trademarks that we own or have the right to use may not provide us with any competitive advantages; |
| ● | Our efforts to protect our proprietary rights may not be effective in preventing misappropriation of our intellectual property or that of those from whom we license our rights to use; |
| ● | Our efforts may not prevent the development and design by others of products or technologies similar to or competitive with, or superior to those we use or develop; or |
| ● | Another party may obtain a blocking patent and we or our licensors would need to either obtain a license or design around the patent in order to continue to offer the contested feature or service in our products. |
Effective protection of intellectual property rights may be unavailable or limited in China or certain other countries. Policing the unauthorized use of our proprietary technology can be difficult and expensive. Litigation might be necessary to protect our intellectual property rights, which may be costly and may divert our management’s attention away from our core business. Furthermore, there is no guarantee that litigation would result in an outcome favorable to us. If we are unable to protect our proprietary rights adequately, it would have a negative impact on our operations.
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We, or the owners of the intellectual property rights licensed to us, may be subject to claims that we or such licensors have infringed the proprietary rights of others, which could require us and our licensors to obtain a license or change designs.
Although we do not believe any of our products infringe upon the proprietary rights of others, there is no assurance that infringement or invalidity claims (or claims for indemnification resulting from infringement claims) will not be asserted or prosecuted against us or those from whom we have licenses or that any such assertions or prosecutions will not have a material adverse effect on our business. Regardless of whether any such claims are valid or can be asserted successfully, defending against such claims could cause us to incur significant costs and could divert resources away from our other activities. In addition, assertion of infringement claims could result in injunctions that prevent us from distributing our products. If any claims or actions are asserted against us or those from whom we have licenses, we may seek to obtain a license to the intellectual property rights that are in dispute. Such a license may not be available on reasonable terms, or at all, which could force us to change our designs.
We incur significant costs as a result of our operating as a public company and our management is required to devote substantial time to compliance with the regulatory requirements placed on a public company.
As a public company with substantial operations, we incur significant legal, accounting and other expenses. The costs of preparing and filing annual, quarterly and current reports, proxy statements and other information with the SEC and furnishing audited reports to shareholders is time-consuming and costly.
It has also been time-consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and this remains an ongoing process. Certain members of our management have limited or no experience operating a company whose securities are listed on a national securities exchange or with the rules and reporting practices required by the federal securities laws as applied to a publicly traded company. We have needed to recruit, hire, train and retain additional financial reporting, internal control and other personnel in order to develop and implement appropriate internal controls and reporting procedures.
Our ongoing investment in new products is inherently risky, and could disrupt our current operations.
We have invested and expect to continue to invest in new products. Our plan to market and sell high-end physiotherapeutic jade mats for use in therapy clinics, hospitality, and real estate projects in Malaysia and other regions in Southeast Asia is a reflection of our ongoing efforts to innovate and provide useful products in new geographical markets. Such endeavors including the investment of jade mats in Malaysia involve significant risks and uncertainties, including insufficient revenues from such investments to offset any new liabilities assumed and expenses associated with these new investments, inadequate return of capital on our investments, distraction of management from current operations, and risks and competition not discovered in our due diligence and decision making of such strategy plans could cause us to fail to realize the anticipated benefits of such investments and incur unanticipated liabilities. Due to the negative impact caused by COVID-19 in 2021 and 2022, we eventually sold the entire jade mats inventory for $2.00 million in liquidation sales and existed from Jade Mats business in June 2023. Because the development and investment in new products and markets are inherently risky, no assurance can be given that such plans will be successful and will not adversely affect our reputation, financial condition, and operating results.
Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information and adversely impact our reputation and results of operations.
Global cybersecurity threats can range from uncoordinated individual attempts to gain unauthorized access to our information technology (“IT”) systems to sophisticated and targeted measures known as advanced persistent threats. While we employ measures to prevent, detect, address and mitigate these threats (including access controls, data encryption, vulnerability assessments, continuous monitoring of our IT networks and systems and maintenance of backup and protective systems), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of business operations. While no cybersecurity attack to date has had a material impact on our financial condition, results of operations or liquidity, the threat remains and the potential consequences of a material cybersecurity incident include reputational damage, litigation with third parties, diminution in the value of our investment in research, development and engineering, and increased cybersecurity protection and remediation costs, which in turn could adversely affect our competitiveness and results of operations.
If we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately. Any inability to report and file our financial results accurately and timely could harm our business and adversely affect the trading price of our common stock.
We are required to establish and maintain internal controls over financial reporting and disclosure controls and procedures and to comply with other requirements of the Sarbanes-Oxley Act and the rules promulgated by the SEC. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2025. See “Item 9A. Controls and Procedures.” However, our management, including our Chief Executive Officer and Chief Financial Officer, cannot guarantee that our internal controls and disclosure controls and procedures will prevent all possible errors. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the possibility that judgments in decision-making can be faulty and subject to simple error or mistake. Furthermore, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, measures of control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
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We are a holding company that depends on cash flow from our wholly owned subsidiaries to meet our obligations, and any inability of our subsidiaries to pay us dividends or make other payments to us when needed could disrupt or have a negative impact on our business.
We are a holding company with no material assets other than the stock of our wholly owned subsidiaries, Diamond Bar, Nova Furniture, Nova Samoa, Nova Malaysia and Xmax Capital. We rely on dividends paid by our subsidiaries for our cash needs, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. If our subsidiaries are unable to pay us dividends and make other payments to us when needed because of regulatory restrictions or otherwise, we may be materially and adversely limited in our ability to make investments or acquisitions that could be beneficial to our business, pay dividends or otherwise fund and conduct our business.
If relations between the U.S. and China worsen, our business could be adversely affected as we have to find new suppliers and manufacturers out of China.
Political tensions between the United States and China have escalated including trade disputes and tariffs. Rising political tensions could reduce levels of trades, investments, technological exchanges and other economic activities between the two major economies, which would have a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could have a material adverse effect on our business, prospects, financial condition and results of operations. The international trade policies of China and the U.S. have adversely affected our business, and the imposition of trade sanctions relating to imports, taxes, import duties and other charges on imports from China, including those applied specifically to furniture products, or the imposition of taxes, import duties or other charges on exports to the U.S. have increased our costs and decreased our earnings. Due to an increase in tariffs imposed by the U.S., some customers are seeking alternative resources instead of China, which has negatively affected the purchase orders and our sales as we mainly resource our products from China. In order to avoid these new tariffs, the market has shifted towards an uncertain era. The Company started to source certain of its new products from manufacturers in India in 2020. However, due to the quality issue and recent increase and change 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. If and to the extent we are not able to mitigate the effects of such trade or tariff policies, our operations may be adversely affected.
Our compliance with the Foreign Corrupt Practices Act may put us at a competitive disadvantage, while our failure to comply with the Foreign Corrupt Practices Act may result in substantial penalties.
We are required to comply with the United States Foreign Corrupt Practices Act, or the FCPA, which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Although we inform our personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties. Non-U.S. companies, including some of our competitors, are not subject to the provisions of the FCPA. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time to time in Asian countries that we conduct business. If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage.
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Risks Related to Our Securities
Our shares may be delisted under the HFCA Act and related regulations if the PCAOB is unable to inspect our auditor, and the delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.
The Holding Foreign Companies Accountable Act was enacted on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On June 22, 2021, the U.S. Senate passed the AHFCA Act, which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. On December 29, 2022, a legislation entitled the Consolidated Appropriations Act, was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to AHFCA Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two, thus reducing the time period before our securities may be prohibited from trading or delisted if our auditor is unable to meet the PCAOB inspection requirement.
On December 16, 2021, the PCAOB issued its determinations (the “Determination”) that they are unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong. The Determination includes lists of public accounting firms headquartered in mainland China and Hong Kong that the PCAOB is unable to inspect or investigate completely. The Company’s current auditor Enrome LLP is headquartered in Singapore and is not on the list.
On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination.
If PCAOB is unable to inspect or investigate completely our auditor, it could cause the trading in our securities to be prohibited under the Holding Foreign Companies Accountable Act and related regulations, and as a result Nasdaq may delist our securities. If our securities are unable to be listed on another securities exchange, such a delisting would substantially impair your ability to sell or purchase our securities when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our ordinary shares. Further, new laws and regulations or changes in laws and regulations could affect our ability to list our securities on Nasdaq, which could materially impair the market for and market price for our securities.
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The market price for our common stock may be volatile, which could make it more difficult or impossible for an investor to sell our common stock for a positive return on their investment.
The trading price of our common stock may fluctuate widely in response to various factors, some of which are beyond our control. These factors include, but are not limited to, our quarterly operating results or the operating results of other companies in our industry, announcements by us or our competitors of acquisitions, new products, product improvements, commercial relationships, intellectual property, legal, regulatory or other business developments and changes in financial estimates or recommendations by stock market analysts regarding us or our competitors. In addition, the stock market in general, and the market for companies that became public by means of a reverse acquisition with a public shell company in particular, has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated or disproportionate to their operating performance. These broad market fluctuations may materially affect our stock price, regardless of our operating results. Furthermore, the market for our common stock historically has been limited and we cannot assure you that a larger market will ever be developed or maintained. Market fluctuations and volatility, as well as general economic, market and political conditions, could reduce our market price. As a result, these factors may make it more difficult or impossible for you to sell our common stock for a positive return on your investment.
If we fail to continue to meet the listing standards of NASDAQ, our common stock may be delisted, which could have a material adverse effect on the liquidity of our common stock.
Our common stock is currently listed on the Nasdaq Capital Market. In order to maintain our listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding minimum stockholders’ equity, minimum share price, and certain corporate governance requirements. There can be no assurance that we will be able to comply with the applicable listing standards of Nasdaq.
If we fail to satisfy Nasdaq’s continued listing requirements, Nasdaq may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair stockholders’ ability to sell or purchase our common stock when they wish to do so. In the event of a delisting, we may take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.
If our common stock is delisted by Nasdaq, our common stock may be eligible to trade on an over-the-counter quotation system, such as the OTCQB or OTC Pink markets, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value of our common stock. In addition, if our common stock is delisted, we would be subject to rules promulgated by the Securities and Exchange Commission relating to “penny stocks,” which impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and institutional accredited investors. Consequently, the delisting of our common stock, if it occurred, could affect the ability of broker-dealers to sell our common stock, which could further negatively affect the ability of stockholders or other investors to buy and sell our common stock.
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If we were deemed to be an investment company under the Investment Company Act of 1940 (the “Investment Company Act”), as amended, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition, and results of operations.
Under the Investment Company Act, absent an applicable exemption, a company generally will be deemed to be an “investment company” if (a) it is in the business of investing, reinvesting, owning, holding, or trading in securities and (b) it owns or proposes to acquire “investment securities” having a value exceeding 40% of its total assets (other than U.S. government securities and cash items) on an unconsolidated basis (such second prong, the “40% Test”). We do not believe that we or any of our subsidiaries are an “investment company” for purposes of the Investment Company Act, including in part, because neither we nor any of our subsidiaries are in the business of investing, reinvesting, owning, holding, or trading in securities, as required under Section 3(a)(1)(C) of the Investment Company Act.
We are engaged primarily in the design and marketing of contemporary styled residential and commercial furniture, and our historical development, public representations of policy, the activity of our officers and directors, the nature of our present assets, the sources of our present income, and the public perception of the nature of our business collectively support the conclusion that we are an operating company and not an investment company. We currently conduct, and intend to continue to conduct, our operations so that neither we, nor any of our subsidiaries, is required to register as an “investment company” under the Investment Company Act.
We have made, and may continue to make, investments in securities of other entities in order to support our primary business of designing and marketing residential and commercial furniture and new business development in AI related technologies and applications. If a significant portion of our assets were to consist of investment securities, or if we were otherwise deemed to meet the definition of an investment company under the Investment Company Act, we would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the U.S. Securities and Exchange Commission (the “SEC”), or modify our business and organizational structure to fall outside the definition of an investment company. Registering as an investment company would subject us to substantial regulation concerning management, operations, transactions with affiliates, and portfolio composition, including restrictions with respect to diversification and industry concentration, and other matters. Accordingly, registration under the Investment Company Act would significantly affect our ability to operate as contemplated.
If we were deemed to be an investment company, Rule 3a-2 under the Investment Company Act is a safe harbor that provides a one-year grace period for transient investment companies that have a bona fide intent to be engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period), in a business other than that of investing, reinvesting, owning, holding, or trading in securities, with such intent evidenced by the company’s business activities and an appropriate resolution of its board of directors. The grace period is available not more than once every three years and runs from the earlier of (i) the date on which the issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis or (ii) the date on which the issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Accordingly, the grace period may not be available at the time that we seek to rely on Rule 3a-2; however, Rule 3a-2 is a safe harbor and we may rely on any exemption or exclusion from investment company status available to us under the Investment Company Act at any given time. Furthermore, reliance on Rule 3a-2, Section 3(a)(1)(C), or Rule 3a-1 under the Investment Company Act could require us to take actions to dispose of securities, limit our ability to make certain investments or enter into joint ventures, or otherwise limit or change our business and operations.
We intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the Investment Company Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and would have a material adverse effect on our business, financial condition, and results of operations. In addition, if we failed to register as an investment company when required to do so, we would be prohibited from engaging in certain business activities, and criminal and civil actions could be brought against us. Further, our contracts would be unenforceable unless a court were to find that under the circumstances enforcement would produce a more equitable result than non-enforcement and would not be inconsistent with the purposes of the Investment Company Act.
We monitor our holdings and structure our operations with the goal of maintaining compliance with the Investment Company Act and avoiding the need to register as an investment company. There can be no assurance that we will be able to successfully avoid operating as an investment company. Potential future acquisitions, the mixture of our investments, changes in the value of our assets, and other factors could result in our being deemed an investment company under the Investment Company Act, which could have a material adverse effect on our business.
We may issue additional shares of our common stock or debt securities to raise capital or complete acquisitions, which would reduce the equity interest of our shareholders.
Our Articles of Incorporation, as amended, authorize the issuance of up to 5,000,000,000 shares of common stock, par value $0.001 per share. As of April 10, 2026, there were 4,952,793,773 authorized and unissued shares of our common stock available for future issuance, based on 47,206,227 shares of our common stock issued and outstanding. Although we have no commitments as of the date of this report to issue our securities, we may issue a substantial number of additional shares of our common stock or debt securities to complete a business combination or to raise capital. We plan to file a shelf registration statement on Form S-3 under which we may, from time to time, sell securities in one or more offerings.
The issuance of additional shares of our common stock may significantly reduce the equity interest of our existing shareholders and adversely affect prevailing market prices for our common stock.
We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.
We do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the Board of Directors may consider relevant. We are a holding company that depends on cash flow from our wholly owned subsidiaries to meet our obligations, and any inability of our subsidiaries to pay us dividends or make other payments to us when needed could disrupt or have a negative impact on our business. Our management intends to follow a policy of retaining all of our earnings to finance the development and execution of our strategy and the expansion of our business. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates.
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Provisions in the Nevada Revised Statutes and our Amended and Restated Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions.
Members of our Board of Directors and our officers may have no liability for breaches of their fiduciary duty of care as a director or officer, except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Amended and Restated Bylaws as authorized by the Nevada Revised Statutes. Specifically, Section 78.138 of the Nevada Revised Statutes provides that a director or officer is not individually liable to the company or its shareholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that (1) the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law. This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. Accordingly, you may be unable to prevail in a legal action against our directors or officers even if they have breached their duty of care. In addition, our Amended and Restated Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and expenses resulting from their acting in such capacities with us. This means that if you were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required to pay. Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Item 2. Properties
Our principal executive offices and those of Diamond Bar are in leased office space with showroom, distribution and warehouse space in Commerce, California. Diamond Bar also maintains showrooms in leased space at Las Vegas Market in Nevada and High Point Market in North Carolina. Nova Malaysia was in leased office space with showroom, service center and warehouse space in Kuala Lumpur, Malaysia.
We believe that our existing office and distribution facilities are adequate for current and presently foreseeable operations. In general, our properties are well maintained, considered adequate and being utilized for their intended purposes. See Note 16 to our consolidated financial statements contained herein, which discloses lease agreements.
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Item 3. Legal Proceedings
On March 8, 2019, Jie Yuan (the “Jie Action”) filed a putative shareholder derivative lawsuit in the United States District Court for the Central District of California, purportedly on behalf of the Company against its former and current CEOs and CFOs (Thanh H. Lam, Ya Ming Wong, Jeffery Chuang and Yuen Ching Ho) and directors (Charlie Huy La, Bin Liu, Umesh Patel, and Min Su) and vice president (Steven Qiang Liu) (collectively, the “Defendants”). In this action, the putative derivative plaintiffs seek to recover any losses the Company sustains as a result of alleged securities violations that were alleged in the matter of Barney v. Nova Lifestyle, Inc., United States District Court for the Central District of California. It is alleged that the Defendants caused the Company to make the alleged false and/or misleading statements giving rise to the Barney Action. The Plaintiff also alleges that President and CEO Lam engaged in self-dealing transactions by leasing her property to Diamond Bar, a Company subsidiary, and asserts, in conclusory fashion, that Lam, former CEO and director Ya Ming Wong, former CFO and director Yuen Ching Ho, and director Umesh Patel sold securities during the period of time when the alleged false and/or misleading statements were made “with knowledge of material non-public information.”
In the Barney action, the putative class plaintiffs alleged that the Company artificially inflated its share price by issuing a press release announcing a strategic relationship with Shanxi Winqing Senior Care Service Group, claiming in the Company’s Annual Statements on Form 10-Ks for the 2017 and 2018 fiscal years that Shanxi Winqing and Merlino Lewis LLP were among the Company’s largest customers, and reporting revenues from sales transactions with these entities. Plaintiffs claimed that Shanxi Winqing was a fictitious entity and Merlno Lewis LLP dissolved in 2013, so that the announcement of a strategic alliance was false and the reported revenues non-existent. The Company denied these allegations and all liability. It asserted that the entities referenced in its public disclosures were actual companies and the revenues booked from those entities were genuine and actually collected. The Company alleged that no registration exists for Shanxi Winqing because the Company slightly mistranslated its Chinese name in its public disclosures. Similarly, the Company claimed to have previously sold products to Merlino Lewis LLP and failed to update its customer name when the customer restructured its business.
On May 15, 2019, Wilson Samuels (the “Samuels Action”) filed a largely duplicative putative derivative complaint purportedly on behalf of the Company against the same current and former directors and officers named in the Jie Action other than Steven Qiang Liu. That action was filed in the United States District Court for the Central District of California. Samuels repeats the allegations of the Complaint in the Jie Action. Additionally, Samuels claims that, in announcing its change of auditing firms in September 2016, the Company asserted that it made this move because its existing auditor ceased auditing public companies subject to regulation in the United States without disclosing that its new auditing firm was created in a merger of three accounting firms, including a firm whose registration was revoked by the Public Company Accounting Oversight Board. Samuels also claims that the Company redeemed its stock in reliance upon the same purported fraudulent recognition of revenues claimed in the putative class action. Samuels purports to state direct claims under Sections 10(b) and 20 of the Exchange Act and SEC Rule 10b-5.
On March 3, 2020, the defendants filed motions to stay the derivative actions until the Barney Action is resolved or alternatively to dismiss on the grounds that plaintiffs’ failure to make demand upon the Board of Directors was not excused and the Complaints otherwise fail to state a claim upon which relief can be granted. By Order entered April 7, 2020, the Court granted defendants’ Motion to Stay and stayed the Jie Action until the Barney Action is resolved. The Court subsequently entered a similar Order in the Samuels Action.
As previously reported, the parties have now settled the Barney Action. The agreed $750,000 settlement payment was entirely funded by the Company’s insurance carrier and has been tendered to a claims facility.
With the final settlement of the Barney Action, the conditions for the stay in the Derivative Actions expired.
The parties accordingly filed a stipulation to lift the stay and consolidate the actions. The Stipulation also set deadlines for plaintiffs to file a consolidated amended complaint and for defendants to respond to this complaint. By January 7, 2025 Orders, the Court adopted the Stipulation.
On February 6, 2025, the deadline for filing an amended complaint, plaintiffs filed a Notice of Dismissal without prejudice. While plaintiffs should have sought Court approval, the Clerk accepted the Notice of Dismissal and the lead case has been marked closed.
Other than the above, the Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition or results of operations.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Since January 17, 2014, our common stock has been quoted on The NASDAQ Stock Market and it is currently traded under the symbol “NVFY.” On April 10, 2026, the closing price for our common stock as reported on the NASDAQ Stock Market was $7.21 per share.
Holders of Record
On April 10, 2026, there were approximately 48 holders of record based on information provided by our transfer agent. Many of our shares of common stock are held in street or nominee name by brokers and other institutions on behalf of shareholders and we are unable to estimate the total number of shareholders represented by these record holders.
Dividend Policy
Dividends may be declared and paid out of legally available funds at the discretion of our Board of Directors. We do not anticipate or contemplate paying dividends on our common stock in the foreseeable future. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors. We currently intend to utilize all available funds to develop our business.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Safe Harbor Declaration
The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly under the heading “Risk Factors.”
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’s brand family currently includes Nova LifeStyle, Diamond Sofa (www.diamondsofa.com) and Nova Living.
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Our customers 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. the Company is 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.
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 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”), 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 subsidiary 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.
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, Nova LifeStyle, Inc. 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. In July 2021, we completed a registered direct offering of our shares of common stock and received offering gross proceeds of $3,120,622. In May 2024, August 2024 and October 2024, we completed three private placements for gross proceeds of $750,000. 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. 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.
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On April 18, 2024, the Company received written notice from the NASDAQ stating that the Company does not meet the requirement of maintaining a minimum of $2,500,000 in stockholders’ equity for continued listing on the NASDAQ Capital Market, as set forth in NASDAQ Listing Rule 5550(b)(1), the Company also does not meet the alternative of market value of listed securities of $35 million under NASDAQ Listing Rule 5550(b)(2) or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years under NASDAQ Listing Rule 5550(b)(3), and the Company is no longer in compliance with the NASDAQ Listing Rules. The NASDAQ notification letter provided the Company until June 6, 2024 to submit a plan to regain compliance. If the plan is accepted, NASDAQ can grant the Company an extension up to 180 calendar days from the date of NASDAQ letter to demonstrate 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. 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. On October 11, 2024, the Company and Nova Samoa have entered into orders to purchase inventories in total amount of $4,600,000, which will be paid in 3,321,429 shares (“Shares”) of common stock of the Company at US$1.40 per share as disclosed in the Form 8-K filed by the Company with SEC on October 11, 2024 (the “Form 8-K”). The Company believes it has regained compliance with the stockholders’ equity requirement based upon the Transaction. 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 of the Company 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 of non-compliance from Nasdaq as of the day of this report.
On December 27, 2024, the Company received a letter from Nasdaq notifying the Company that, because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company no longer meets the minimum bid price requirement for continued listing on Nasdaq under Nasdaq Marketplace Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”). The Company has a period of 180 calendar days from the date of notification, until June 25, 2025 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement. On May 27, 2025, the Company received a written notification from the NASDAQ Stock Market Listing Qualifications Staff indicating that the Company has regained compliance with the $1.00 minimum closing bid price requirement for continued listing on the NASDAQ Capital Market pursuant to NASDAQ Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”) and that the matter is now closed.
On September 25, 2025, Nova Furniture Limited (the “Nova BVI”), a company incorporated in the British Virgin Islands and a wholly owned subsidiary of Nova LifeStyle, 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 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.
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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.
On October 15, 2025, Xmax Alpha Holdings Ltd. (the “Xmax Alpha”), 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, 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 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.
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 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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Principal Factors Affecting Our Financial Performance
Since 2019, we have moved away from low margin products and this move was intended to improve our gross profit margin, receivable collections and net profitability, and to increase our return on long-term equity. We terminated sales and marketing efforts to customers that represented a high purchase volume but low profit margin, and we adjusted our product line, which included the launch of our Summer 2023 Collection in the Las Vegas and High Point Markets, with a view to attracting a higher-end ultimate customer. The core focus of the Company’s direction 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 fulfill 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. We believe these new strategies will provide us with significant long term growth opportunities. Significant factors that we believe could affect our operating results are the (i) prices of our 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.
Critical Accounting Policies
While our significant accounting policies are described more fully in Note 2 to our accompanying audited 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 audited 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 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 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.
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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.
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 audited 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 $258 and $367 as of December 31, 2025 and 2024, respectively. During the year ended December 31, 2025 and 2024, expected credit losses provision (reversal) was ($109) and ($165), respectively. As of December 31, 2025, we had gross receivable of $2,445,503 of which $5,424 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.
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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.
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. (Nova Lifestyle, Inc.) and Diamond Bar are subject to U.S. federal and state income taxes. Nova BVI was incorporated in the BVI, Nova Samoa and Xmax Capital was incorporated in Samoa. Xmax Alpha Holdings Ltd, Xmax Beta Holdings Ltd, Xmax Delta Holdings Ltd and Xmas Sigma Holdings Ltd were incorporated in Caymen Island. There is no income tax for companies domiciled in the BVI, Cayman Islands and Samoa. Accordingly, the Company’s audited consolidated financial statements do not present any income tax provisions related to the BVI, Cayman Islands and Samoa tax jurisdictions where Nova BVI, Nova Samoa, Xmax Capital, Xmax Alpha Holdings Ltd, Xmax Beta Holdings Ltd, Xmax Delta Holdings Ltd and Xmax Sigma Holdings Ltd are domiciled. Nova Malaysia is incorporated in Malaysia and is subject to Malaysia income taxes at the statutory rate of 24%.
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.
As of December 31, 2025 and 2024, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately $21.7 million and $22.2 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, or GILTI. 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.
As of December 31, 2025 and 2024, unrecognized tax benefits were approximately nil and nil, respectively. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was nil as of December 31, 2025 and 2024.
A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the years ended December 31, 2025 and 2024, is as follows:
| Gross UTB | ||||||||
| 2025 | 2024 | |||||||
| Balance – January 1 | - | - | ||||||
| Foreign exchange adjustment | - | - | ||||||
| Balance – December 31 | $ | - | $ | - | ||||
At December 31, 2025 and 2024, 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, which totaled nil and nil for the years ended December 31, 2025 and 2024, respectively, related to the Company’s operations. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next 12 months.
XMax Inc. (Nova Lifestyle) and Diamond Bar 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.
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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
We recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. We recognize revenues following the five step model prescribed under ASU No. 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.
Revenues from product sales is recognized when the product are delivered to customers for domestic sales or upon export for overseas sales. 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.
Revenue from product sales is recognized when the customer obtains control of our product, which typically occurs upon shipment to the customer. 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.
Revenue from product sales is recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers.
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 our customer.
Our sales policy allows for the return of product within the warranty period if the product is defective and the defects are our fault. As alternatives for the product return option, the customers have the option of asking us for a discount for products with quality issues, or of receiving replacement parts from us at no cost. The amount of reserves for return of products, the discount provided to the customers, and cost for the replacement parts were immaterial for the years ended December 31, 2025 and 2024.
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.
We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling expenses on our unaudited consolidated statements of operations.
Foreign Currency Translation and Transactions
The accompanying unaudited consolidated financial statements are presented in United States Dollar (“$” or “USD”), which is also the functional currency of XMax Inc. (formerly Nova LifeStyle, Inc.), XMax Alpha, Nova Furniture, Nova Samoa, Diamond Bar, and i Design.
The Company’s subsidiary with operations in Malaysia uses its local currency, Malaysian Ringgit (“RM”), as its functional currency. An entity’s functional currency is the currency of the primary economic environment in which it operates, which is normally the currency 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 accumulated deficits 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 | ||||
| December 31, 2025 | RM4.06 to 1 | |||
| December 31, 2024 | RM4.47 to 1 | |||
| Income statement and cash flow items | ||||
| For the year ended December 31, 2025 | RM4.28 to 1 | |||
| For the year ended December 31, 2024 | RM4.57 to 1 |
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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. The Company has determined that there is only one reportable operating segment.
We concluded that we had one reportable segment under ASC 280 because Diamond Bar is a furniture distributor based in California focusing on customers in the US and Nova Malaysia is a furniture retailer and distributor focusing on customers primarily in Malaysia and Asia. Each of our subsidiaries is operated under the same senior management of our company, and we view the operations of Diamond Bar and Nova Malaysia as a whole for making business decisions. Our long-lived assets are mainly property, plant and equipment located in the United States and Malaysia for administrative purposes.
Sales to customers by geographic area are determined by reference to the physical product shipment delivery locations requested by our customers. For example, if the products are delivered to a customer in the U.S., the sales are recorded as generated in the U.S.; if the customer directs us to ship its products to China, the sales are recorded as sold in China.
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 year ended December 31, 2025. 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.
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Recently Issued But Not Yet Adopted Accounting Pronouncements
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 consolidated financial statement presentations and disclosures.
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 consolidated financial statements and related disclosures.
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 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.
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.
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 Years Ended December 31, 2025 and 2024
The following table sets forth the results of our operations for the years ended December 31, 2025 and 2024.
| Years Ended December 31, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| $ | % of Sales | $ | % of Sales | |||||||||||||
| Sales | $ | 16,722,703 | $ | 9,686,975 | ||||||||||||
| Cost of sales | (12,538,205 | ) | (75 | )% | (5,437,484 | ) | (56 | )% | ||||||||
| Gross profit | 4,184,498 | 25 | % | 4,249,491 | 44 | % | ||||||||||
| Operating expenses | (6,113,230 | ) | (37 | )% | (9,612,846 | ) | (99 | )% | ||||||||
| Loss from operations | (1,928,732 | ) | (12 | )% | (5,363,355 | ) | (55 | )% | ||||||||
| Other expenses, net | (2,070,833 | ) | (12 | )% | (195,736 | ) | (2 | )% | ||||||||
| Income tax benefit (expense) | 580,987 | 3 | % | (2,614 | ) | - | % | |||||||||
| Net loss | (3,418,578 | ) | (20 | )% | (5,561,705 | ) | (57 | )% | ||||||||
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Sales
Sales for the year ended December 31, 2025 were $16.72 million, an increase of 73% from $9.69 million for the year of 2024. This increase in sales resulted primarily from 102% increase in average selling price, while partially offset by 15% decrease in sales volume. Our three largest selling product categories for the year ended December 31, 2025 were marbles slabs, sofa and coffee tables, which accounted for approximately 47%, 30% and 5% of sales, respectively. For the year ended December 31, 2024, the three largest selling categories were sofas, beds and coffee tables, which accounted for approximately 50%, 13% and 8% of sales, respectively.
The $7.06 million increase in sales for the year ended December 31, 2025, compared to the year of 2024, was mainly due to increased sales to Hong Kong. Sales to Hong Kong increased by 100% to $7.92 million for the year ended December 31, 2025, compared to $0 million for the year of 2024, such increase mainly due to we sold marble slabs to one customer in Hong Kong. The increase in sales was partially offset by decrease in sales to North America and other countries. Sales to North America decreased by 8% to $8.72 million for the year ended December 31, 2025, compared to $9.44 million for the year of 2024, such decrease mainly due to decrease in sales volume by 29% from the customers in North America. Sales to other countries decreased by $0.17 million to $0.09 million for the year ended December 31, 2025, from $0.25 million for the year of 2024, primary due to less sales order received from our customers in other countries.
Cost of Sales
Cost of sales consists primarily of costs of finished goods and materials purchased from third-party manufacturers. Total cost of sales increased by 131% to $12.54 million for the year ended December 31, 2025, compared to $5.44 million for the year of 2024. Cost of sales as a percentage of sales increased to 75% for the year ended December 31, 2025, compared to 56% for the year of 2024. The increase in cost of sales in dollar term and in cost of sales as a percentage of sales are a result of selling marble slabs with low profit margin.
Gross Profit
Gross profit was $4.18 million for the year ended December 31, 2025, compared to $4.25 million for the same period of 2024, representing a decrease in gross profit of $0.06 million. Our gross profit margin was 25% for the year ended December 31, 2025, compared to 44% for the same period of 2024. The decrease in gross profit in percentage and dollar term was mainly due to a result of selling the marble slabs with low profit margin.
Operating Expenses
Operating expenses consisted of selling, general and administrative expenses, and research and development. Operating expenses were $6.11 million for the year ended December 31, 2025, compared to $9.61 million for the year of 2024. Selling expenses decreased by 12%, or $0.18 million, to $1.38 million for the year ended December 31, 2025, from $1.56 million for the same period of 2024, primarily due to decreased marketing and advertising expenses. Also, general and administrative expenses decreased by 22%, or $1.32 million, to $4.74 million for the year ended December 31, 2025, from $6.06 million for the year of 2024, primarily due to a decrease in consulting fee of $1.20 million, insurance of $0.13 million and design fee of $0.09 million, while the decrease was partially offset by an increase in legal and professional fee of $0.34 million and auditing fee of $0.09 million. In addition, research and development expenses decreased by 100%, or $2.00 million to $0 for the year ended December 31, 2025, from $2.00 million for the year of 2024, primary due to we did not spend additional fee on our AI-driven smart living solutions and IT system due to abandonment in 2025.
Other Expenses, Net
Other expenses, net was $2.07 million for the year ended December 31, 2025, compared to other expense, net of $0.20 million for the year of 2024, representing a decrease in other expenses of $1.87 million. The decrease in other expenses were due primarily to an increase in management fee of $2.30 million for investing Preamble, loss on impairment of goodwill of $0.22 million and plant, property and equipment written off of $0.19 million since Nova Malaysia was ceased its operations and in the process of de-registered in 2025, non-operation income of $0.63 million from $4,496 in the same year of 2024 to $0.64 million in 2025, while the increase in other expenses partially offset by increase in unrecognized gain of $0.30 from the investment in the fund of Preamble.
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Income Tax Benefit (Expense)
Income tax benefit (expense) was $0.58 million and ($2,614) for the year ended December 31, 2025 and 2024, respectively. The income tax benefit for the year ended December 31, 2025 was mainly due to the net loss for the year ended December 31, 2025.
Net Loss
As a result of the foregoing, our net loss was $3.42 million for the year ended December 31, 2025, compared to $5.56 million of net loss for the year of 2024.
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 December 31, 2025, 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 $9,389,956 at December 31, 2025, an increase of $7,283,792 from net working capital of $2,106,164 at December 31, 2024. The ratio of current assets to current liabilities was 4.92-to-1 at December 31, 2025.
The following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2025 and 2024:
| 2025 | 2024 | |||||||
| Cash (used in) provided by: | ||||||||
| Operating activities | $ | (445,838 | ) | $ | (1,391,779 | ) | ||
| Investing activities | (22,808,208 | ) | (14,121 | ) | ||||
| Financing activities | 29,752,352 | 1,175,578 | ||||||
Net cash used in operating activities was $0.45 million for the year ended December 31, 2025, an decrease in cash outflow by $0.94 million from $1.39 million of cash used in operating activities for the year of 2024.
The decrease in cash outflow was attributable primarily to (i) an increase in cash inflow of $4.32 million for advance to suppliers to $4.32 million cash inflow for the year ended December 31, 2025, from $0.05 million cash inflow for the year of 2024, such increase in cash inflow being mainly due to marble slabs were delivered and sold to one of our customers in Hong Kong; (ii) an increase in cash inflow of $1.32 million for inventory to $0.65 million cash inflow for the year ended December 31, 2025, from $0.67 million cash outflow for the year of 2024, such increase in cash inflow being mainly due to we purchased less products from our suppliers due to reciprocal tariff took effective in April 2025. The increase in operating cash outflow was partially offset by (i) increase in cash outflow of $2.42 million of accounts receivable to cash outflow of $2.41 million for the year ended December 31, 2025, from the accounts receivable of cash inflow of $0.01 million for the year of 2024, such increase in cash outflow being mainly due to we sold marble slabs on credit to one customer in Hong Kong in 2025; (ii) increase in cash outflow of $1.28 million to cash outflow of $0.69 million for the accrued liabilities and other payables for the year ended December 31, 2025, from $0.59 million cash inflow for the year of 2024, such increase in cash outflow being mainly due to payments were made to the service providers in timely basis; (iii) increase in cash outflow of $1.92 million to cash outflow of $1.89 million for the tax payable for the year ended December 31, 2025, from $0.39 cash inflow for the year of 2024, such increase in cash outflow being mainly due to payments were made to the Internal Revenue Service for the one-time transition tax in 2017.
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Net cash used in investing activities was $22.81 million for the year ended December 31, 2025, an increase in cash outflow of $22.79 million from $0.01 million of cash used in investing activities for the year of 2024. We incurred cash outflow of $22.81 million to invest into the funds of Preamble Capital LLC.
Net cash provided by financing activities was $29.75 million for the year ended December 31, 2025, compared to $1.18 million for the year of 2024. During the year ended December 31, 2025, we borrowed $0.20 million from a shareholder, issued convertible notes for $5.00 million from a lender and issued stocks and warrants to investors with the net proceeds of $24.67 million, while we paid off one of loans to shareholder for $0.07 million. During the year ended December 31, 2024, we borrowed $0.07 million from an unrelated party and $0.36 million from a shareholder. We also sold 450,000 shares of common stock with the proceeds of $0.75 million for our working capital.
As of December 31, 2025, we had gross accounts receivable of $2,445,503 of which $1,852 was not yet past due, $2,438,227 was less than 90 days past due and $5,424 was more than 90 days past due. We had an allowance for expected credit losses of $258. As of March 18, 2026, 0.09% of accounts receivable outstanding as of December 31, 2025 had been collected. As of March 18, 2025, all of our accounts receivable outstanding at December 31, 2024 had been collected.
As of December 31, 2025 and 2024, we had advances to suppliers of $313,924 and $4,689,148, 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 March 29, 2026, $150,000 or 48% and $4,689,148 or 100% of our advances to suppliers outstanding at December 31, 2025 and December 31, 2024 had been delivered to us in the form of purchases of furniture, respectively.
Other Long-Term Liabilities
As of 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, XMax Inc., a Nevada company (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.
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 7A. Quantitative and Qualitative Disclosures about Market Risk
Not required.
Item 8. Financial Statements and Supplementary Data
Our financial statements, together with the report thereon, appear in a separate section of this Annual Report beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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Item 9A. 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 December 31, 2025. 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.
Management’s Report on Internal Control over Financial Reporting
Our management, with oversight from our audit committee, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting includes those policies and procedures that: (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. In designing and evaluating internal controls, management recognizes that any internal controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of control systems must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025, using the criteria set forth by the Committee of Sponsoring Organizations of the Tread way Commission (COSO) in the 2014 Internal Control-Integrated Framework. Based on this assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective.
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.
Item 9B. Other Information.
Insider Trading Arrangements
During
the fiscal quarter ended December 31, 2025, none of the Company’s directors or executive officers
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information relating to nominees for director of the Company, compliance with Section 16(a) of the Securities Exchange Act of 1934, and the Company’s code of ethics is set forth under the captions “Proposal 1–Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance,” and “Code of Ethics,” respectively, in the Proxy Statement for the 2026 Annual Meeting of Stockholders. The information required by this item regarding delinquent Section 16(a) reports, if applicable, is set forth under “Delinquent Section 16(a) Reports” in the Proxy Statement and incorporated herein by reference. The information required by this item regarding our insider trading policies and procedures is set forth under “Insider Trading Policies” in the Proxy Statement and incorporated herein by reference. Such information is incorporated herein by reference. The definitive Proxy Statement will be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2025.
Item 11. Executive Compensation
Information required by this Item 11 relating to executive compensation and other matters is set forth under the captions “Executive Compensation,” “Non-Employee Director Compensation,” and “Corporate Governance” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information related to ownership of common stock of the Company by certain persons is set forth under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information relating to existing or proposed relationships or transactions between the Company and any affiliate of the Company, as well as matters related to director independence, is set forth under the caption “Certain Relationships and Related Transactions” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
Information relating to the Company’s principal accountant’s fees and services is set forth under the caption “Principal Accountant Fees and Services” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as part of or are included in this Annual Report:
| 1. | Financial statements listed in the Index to Financial Statements, filed as part of this Annual Report beginning on page F-1; and |
| 2. | Exhibits |
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# Indicates management contract or compensatory plan, contract or arrangement.
†Filed herewith.
‡Furnished herewith.
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XMAX INC.
Consolidated Financial Statements
Years Ended December 31, 2025 and 2024
Index
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of XMax Inc.
Opinion on the Financial Statements
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Investment in Fund
As described in Note 6 to the consolidated financial statements, the Company invested in several funds during the fourth quarter of 2025. These investments are not publicly traded and are measured at fair value using Level 3 inputs under the fair value hierarchy. As of December 31, 2025, the Company recorded these investments at a fair value of $23.1 million.
We identified the valuation of investments in funds as a critical audit matter because the fair value measurements involve significant management judgment and estimation uncertainty. In particular, the valuation is highly sensitive to assumptions regarding the most current purchasing prices and observable transactions such as new offerings. The absence of observable market prices for these investments and the limited historical performance data for certain underlying investment portfolio increased the subjectivity involved in the valuation and the extent of audit effort required.
Our audit procedures related to the valuation of investments in funds included, among others:
| ● | Obtaining an understanding of and testing controls over management’s process for estimating fair value, including controls over the development and review of significant assumptions. | |
| ● | Evaluating the valuation methodologies used by management, including assessing whether they were consistent with market practices and the requirements of U.S. GAAP. | |
| ● | Testing the completeness and accuracy of underlying data used in the valuations. | |
| ● | Evaluating the reasonableness of significant assumptions, including the most current purchasing prices and observable transactions such as new offerings. | |
| ● | Comparing significant assumptions to external market data, industry trends, and historical performance of the underlying investments, where available. |
/s/
We have served as the Company’s auditor since 2024
April 15, 2026
| Enrome LLP | 143 Cecil Street #19-03/04 | admin@enrome-group.com |
| GB Building Singapore 069542 | www.enrome-group.com |
| F-2 |
XMAX INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2025 AND DECEMBER 31, 2024
(Expressed in U.S. Dollars, except for the number of shares)
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Advance to suppliers | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Other receivables | ||||||||
| Total Current Assets | ||||||||
| Noncurrent Assets | ||||||||
| Plant, property and equipment, net | ||||||||
| Right-of-use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Investment in fund | ||||||||
| Lease deposit | ||||||||
| Goodwill | ||||||||
| Total Noncurrent Assets | ||||||||
| Total Assets | $ | $ | ||||||
| F-3 |
XMAX INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONT’D)
AS OF DECEMBER 31, 2025 AND DECEMBER 31, 2024
(Expressed in U.S. Dollars, except for the number of shares)
| 2025 | 2024 | |||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Operating lease liabilities, current | ||||||||
| Finance lease liabilities - current | ||||||||
| Contract liabilities | ||||||||
| Loan from shareholders | ||||||||
| Accrued liabilities and other payables | ||||||||
| Other loan | ||||||||
| Security deposit | ||||||||
| Income tax payable | ||||||||
| Total Current Liabilities | ||||||||
| Noncurrent Liabilities | ||||||||
| Other loan | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Finance lease liabilities - non-current | ||||||||
| Convertible notes | ||||||||
| Total Noncurrent Liabilities | ||||||||
| Total Liabilities | ||||||||
| Contingencies and Commitments | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, $ par value; shares authorized, and shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
| F-4 |
XMAX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in U.S. Dollars, except for the number of shares)
| 2025 | 2024 | |||||||
| 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 | ( | ) | ||||||
| Plant, property and equipment written off | ( | ) | ||||||
| Unrealized gain | ||||||||
| Foreign exchange transaction income (loss) | ( | ) | ||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Financial expense | ( | ) | ( | ) | ||||
| Total Other Expenses, Net | ( | ) | ( | ) | ||||
| Loss Before Income Taxes | ( | ) | ( | ) | ||||
| Income Tax Benefit (Expense) | ( | ) | ||||||
| Net Loss | ( | ) | ( | ) | ||||
| Other Comprehensive (Loss) Income | ||||||||
| Foreign currency translation | ( | ) | ||||||
| Net Loss and Comprehensive Loss | ( | ) | ( | ) | ||||
| Weighted average shares outstanding - Basic and Diluted | ||||||||
| Net loss per share of common stock | ||||||||
| Basic and Diluted | $ | ) | $ | ) | ||||
| F-5 |
XMAX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in U.S. Dollars, except for the number of shares)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income | deficits | Equity | |||||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock issued to employees | ||||||||||||||||||||||||
| Stock issued to consultants | ||||||||||||||||||||||||
| Stock issued to designer | ||||||||||||||||||||||||
| Acquistion of AI and IT Systems | ||||||||||||||||||||||||
| Stock issued to suppliers | ||||||||||||||||||||||||
| Stock issued to an investor | ||||||||||||||||||||||||
| Foreign currency translation loss | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock issued to employees | ||||||||||||||||||||||||
| Stock issued to consultants | ||||||||||||||||||||||||
| Stock issued to creditor | ||||||||||||||||||||||||
| Stock issued to suppliers | ||||||||||||||||||||||||
| Stock issued to investors | ||||||||||||||||||||||||
| Warrant Exercise | ( | ) | ||||||||||||||||||||||
| Foreign currency translation loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at end as of December 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| F-6 |
XMAX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in U.S. Dollars, except for the number of shares)
| 2025 | 2024 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Plant, property and equipment written off | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Write down of inventories | ||||||||
| Stock based compensation expense to employees | ||||||||
| Stock based compensation expense to non-employees | ||||||||
| Research and development | ||||||||
| Unrealized gain | ( |
) | ||||||
| Loss on impairment of goodwill | ||||||||
| Reversal of allowance credit loss | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Advance to suppliers | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Financing lease liabilities | ||||||||
| Accounts payable | ( | ) | ||||||
| Contract liabilities | ( | ) | ||||||
| Accrued liabilities and other payables | ( | ) | ||||||
| Taxes payable | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Purchase of property, plant, and equipment | ( | ) | ||||||
| Investment in fund of Preamble Capital LLC | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from an unrelated party | ||||||||
| Repayment to loan from an unrelated party | ( | ) | ||||||
| Repayment to director | ( | ) | ||||||
| Repayment to SBA loan | ( | ) | ||||||
| Principal payment of finance lease liabilities | ( | ) | ||||||
| Interest paid on finance lease liabilities | ( | ) | ||||||
| Proceeds from loan from a shareholder | ||||||||
| Proceeds from convertible note | ||||||||
| Proceeds from issuing common stocks | ||||||||
| Net Cash Provided by Financing Activities | ||||||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | $ | $ | ||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | ( | ) | ||||||
| Cash and Cash Equivalents, Beginning of Year | ||||||||
| Cash and Cash Equivalents, Ending of Year | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Continuing operations: | ||||||||
| Cash paid during period for: | ||||||||
| Income tax payments | $ | $ | ||||||
| Interest expense | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Activities | ||||||||
| Obtained new right of use of autos | ||||||||
| F-7 |
XMAX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
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”) and Nova Living (M) SDN. BHD. domiciled in Malaysia (“Nova Malaysia”). 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 $
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.
The “Company” 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 HK, Nova Malaysia, Xmax Capital, Xmax Alpha Holdings Ltd, Xmax Beta Holdings Ltd, Xmax Delta Holdings Ltd and Xmax Sigma Holdings Ltd.
| F-8 |
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying 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 audited 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.
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.
| F-9 |
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, $
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 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 audited 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.
| F-10 |
Accounts receivable consisted of the following as of the date indicated:
Schedule of Accounts Receivable
December 31, 2025 | December 31, 2024 | |||||||
| Accounts receivable | $ | |||||||
| Less: Reversal of 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
December 31, 2025 | December 31, 2024 | |||||||
| Balance – January 1 | $ | |||||||
| Reversal of credit losses | ( | ) | ( | ) | ||||
| Balance – December 31 | $ | |||||||
The
expected credit (reversal) losses provision for the years ended December 31, 2025 and 2024 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 years ended December 31, 2025 and 2024, no provision was made on advances to suppliers.
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 years
ended December 31, 2025 and 2024, the Company wrote down (reversal) $
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 year ended December 31, 2025, the company invested $
As
of 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.
| F-11 |
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 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.
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 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 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 (benefit) expense
for the year ended December 31, 2025 and 2024 are ($
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.
| F-12 |
XMax
Inc. (Nova Lifestyle, Inc.), Diamond Bar and I Design are subject to U.S. federal and state income taxes. Nova Furniture BVI was
incorporated in the BVI, Xmax Capital and Nova Samoa were incorporated in Samoa. Xmax Alpha Holdings Ltd, Xmax Beta Holdings Ltd,
Xmax Delta Holdings Ltd and Xmax Sigma Holdings Ltd were incorporated in Cayman Islands. There is no income tax for companies
domiciled in the BVI, Cayman Islands and Samoa. Accordingly, the Company’s consolidated financial statements
do not present any income tax provisions related to the BVI, Cayman Islands and Samoa tax jurisdictions where Nova Furniture BVI, Nova Samoa, Xmax Capital, Xmax Alpha Holdings Ltd, Xmax Beta Holdings Ltd, Xmax Delta Holding Ltd and Xmax Sigma Holdings Ltd are
domiciled. Nova Malaysia is incorporated in Malaysia and is subject to Malaysia income taxes at the statutory rate of
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.
As
of December 31, 2025 and 2024, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately $
As of December 31, 2025 and 2024, unrecognized tax benefits were approximately and , respectively. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was as of December 31, 2025 and 2024.
A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the nine months ended December 31, 2025 and 2024, is as follows:
Schedule of Unrecognized Tax Benefits
| Gross UTB | ||||||||
| 2025 | 2024 | |||||||
| Balance – January 1 | ||||||||
| Foreign exchange adjustment | ||||||||
| Balance – December 31 | $ | $ | ||||||
At December 31, 2025 and 2024, 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, which totaled and for the years ended December 31, 2025 and 2024, respectively, related to the Company’s operations. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next 12 months.
XMax Inc. (Nova Lifestyle), 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.
| F-13 |
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.
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 years ended December 31, 2025 and 2024.
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.
Cost of Sales
Cost of sales consists primarily of costs of finished goods purchased from third-party manufacturers and write-downs of inventory.
Shipping and Handling Costs
Shipping
and handling costs related to delivery of finished goods are included in selling expenses. During the years ended December 31, 2025 and
2024, shipping and handling costs were $
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 $
| F-14 |
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
| 2025 | 2024 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding – Basic and Diluted * | ||||||||
| Net loss per share of common stock | ||||||||
| Basic and Diluted | $ | ) | $ | ) | ||||
| * |
For the years ended December 31, 2025 and 2024, and shares of unvested restricted stock, vested stock options to purchase of and shares of the Company’s common stock, and and shares exercisable under warrants were excluded from the EPS calculation, as their effect were anti-dilutive.
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.
| F-15 |
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 years ended December 31, 2025 and 2024.
Schedule of Concentration Credit Risk
Year Ended December 31, 2025 | As of December 31, 2025 | |||||||
| Customer | Percentage of Total Sales | Percentage of accounts receivable | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
Year Ended December 31, 2024 | As of December 31, 2024 | |||||||
| Customer | Percentage of Total Sales | Percentage of accounts receivable | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
One
and no customer accounted for
One
customer and two customers accounted for
Year Ended December 31, 2025 | As of December 31, 2025 | As of December 31, 2025 | ||||||||||
| Supplier | Percentage of Total Purchases | Balance of Accounts Payable | Balance of Advance to Supplier | |||||||||
| A | % | $ | ||||||||||
| B | % | |||||||||||
| C | % | |||||||||||
| D | % | |||||||||||
| E | % | |||||||||||
Year Ended December 31, 2024 | As of December 31, 2024 | As of December 31, 2024 | ||||||||||
| Supplier | Percentage of Total Purchases | Balance of Accounts Payable | Balance of Advance to Supplier | |||||||||
| A | % | $ | ||||||||||
| B | % | |||||||||||
| C | % | |||||||||||
| D | % | |||||||||||
| E | % | |||||||||||
The
Company purchased its products from two and one major
vendors during the year ended December 31, 2025 and 2024, respectively, accounting for a total of
Accounts
payable to these major vendors were $
Advances
made to these major vendors were $
| F-16 |
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.
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 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 subsidiary with operations in Malaysia uses its local currency, the Malaysian Ringgit (“RM”), as its functional currency. An entity’s functional currency is the currency of the primary economic environment in which it operates, which is the currency 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 | ||
| December 31, 2025 | RM | |
| December 31, 2024 | RM | |
| Income Statement and cash flow items | ||
| For the year ended December 31, 2025 | RM | |
| For the year ended December 31, 2024 | RM |
| F-17 |
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. The Company has determined that there is only one reportable operating segment.
Management
concluded that the Company had
All of the Company’s long-lived assets are mainly property, plant and equipment located in the United States and Malaysia and are utilized for administrative purposes.
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 15.
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 recognises 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 recognised, 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 years ended December 31, 2024 and 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 December 31, 2025 and 2024.
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.
| F-18 |
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.
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 year ended December 31, 2025. 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.
Recently Issued But Not Yet Adopted Accounting Pronouncements
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.
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.
| F-19 |
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.
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 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.
| F-20 |
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.
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 December 31, 2025 and 2024 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 years
ended December 31, 2025 and 2024, the Company wrote-down (reversed) $
Note 4 – Property, plant, and Equipment, Net
As of December 31, 2025 and 2024, Property, plant, and equipment consisted of the following:
Schedule of Plant, Property and Equipment
December 31, 2025 | December 31, 2024 | |||||||
| 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
Depreciation
expense was $
Note 5 – Intangible Assets
As of December 31, 2025 and 2024, intangible assets consisted of the following:
Schedule of Intangible Assets
December 31, 2025 | December 31, 2024 | |||||||
| Accounting software | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization
expense was $
| F-21 |
Note 6 – 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
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 “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 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 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 an additional
subscription in an aggregate amount of US$
| F-22 |
Allocations
Fund Administration, LLC is the administrative manager of Preamble X Capital I. The applicable management fee percentage for the Company
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$
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. A gain of approximately $
As
of December 31, 2025, these funds measured at fair value were $
Note 7 – Advances to Suppliers
The
Company makes advances to certain vendors for inventory purchases. The advances on inventory purchases were $
Note 8 – Prepaid Expenses and Other Receivables
Prepaid expenses and other receivables consisted of the following as of December 31, 2025 and 2024:
Schedule of Prepaid Expenses and Other Receivable
December 31, 2025 | December 31, 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Other receivables | ||||||||
| Prepaid expenses and other receivables | $ | $ | ||||||
As of December 31, 2025 and 2024, prepaid expenses and other receivables mainly represented prepaid insurance, prepaid rent, refund receivable from suppliers, prepaid advertising expense, and Celero and Cardknox account balances.
Note 9 – Accrued Liabilities and Other Payables
Accrued liabilities and other payables consisted of the following as of December 31, 2025 and 2024:
Schedule of Accrued Liabilities and Other Payables
December 31, 2025 | December 31, 2024 | |||||||
| Other payables | $ | $ | ||||||
| Salary payable | ||||||||
| Marketing | ||||||||
| Financed insurance premiums | ||||||||
| Auditing fee | ||||||||
| Warranty liability | ||||||||
| Accrued commission | ||||||||
| Accrued expenses, others | ||||||||
| Total accrued liabilities and other payable | $ | $ | ||||||
| F-23 |
As of December 31, 2025 and 2024, other accrued expenses mainly included legal and professional fees, utilities and unpaid operating expenses incurred in Malaysia. 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 10 – Other Loans
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 11 – Convertible Notes
On
November 18, 2025, XMax Inc., a Nevada company (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 $
Note 12 – Income Taxes
Taxes payable consisted of the following at December 31, 2025 and 2024:
Schedule of Taxes Payable
| 2025 | 2024 | |||||||
| Income tax payable - current | ( | ) | ||||||
As
of December 31, 2025 and 2024, current tax payable were million and $
As of December 31, 2025 and 2024, noncurrent tax payable were million, respectively, arising from a one-time transition tax recognized in the fourth quarter of 2017 on post-1986 foreign unremitted earnings (see below).
| F-24 |
The (benefit) provision for income taxes on loss from continuing operations consisted of the following:
Schedule of Components of Income Tax Expense (Benefit)
| 2025 | 2024 | |||||||
| Current: | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Malaysia | ( | ) | ||||||
| Income tax expense current | ( | ) | ||||||
| Deferred: | ||||||||
| Federal | ||||||||
| State | ||||||||
| Total provision expense for income taxes | $ | ( | ) | $ | ||||
The following is a reconciliation of the difference between the actual (benefit) provision for income taxes and the (benefit) provision computed by applying the federal statutory rate on income before income taxes from continuing operations:
Schedule of Effective Income Tax Rate Reconciliation
| 2025 | 2024 | |||||||
| Tax at federal statutory rate | $ | ( | ) | $ | ( | ) | ||
| State and local income taxes, net of federal effect | ||||||||
| Foreign tax effects | ||||||||
| Malaysia | ||||||||
| Foreign rate differential | ( | ) | ( | ) | ||||
| Tax effects of liquidation | ( | ) | ||||||
| Other foreign | ( | ) | ||||||
| Stock based compensation | ||||||||
| Non-deductible Expenses | ||||||||
| Penalty | ||||||||
| Others | ( | ) | ( | ) | ||||
| Valuation allowance | ||||||||
| Total provision for income taxes | $ | ( | ) | $ | ||||
Schedule of Aggregate Dollar Effects of the Company’s Tax Exemption
| 2025 | 2024 | |||||||
| Aggregate dollar effect of tax holiday | $ | $ |
Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred taxes are comprised of the following:
Schedule of Deferred Tax Assets And Liabilities
| 2025 | 2024 | |||||||
| Non-Current Deferred Tax Assets: | ||||||||
| Accrued liabilities | $ | $ | ||||||
| Accrued Warranty Liability | ||||||||
| Fed & CA amortization | ||||||||
| Stock compensation | ||||||||
| ASC 842 – lease liability | ||||||||
| Inventory | ||||||||
| U.S. NOL | ||||||||
| Capital loss | ||||||||
| Charitable Contribution | ||||||||
| R&D Capitalization | ||||||||
| Interest | ||||||||
| Non-Current Deferred Tax Liabilities: | ||||||||
| Fed & CA depreciation | ( | ) | ( | ) | ||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| ASC 842- ROU Asset | ( | ) | ( | ) | ||||
| Unrealized Gain on Preamble | ( | ) | ||||||
| Net Non-Current Deferred Tax Assets before Valuation Allowance | ||||||||
| Less: Valuation Allowance | ( | ) | ( | ) | ||||
| Non-Current Deferred Tax Assets, Net: | ||||||||
| Total Deferred Assets, Net: | $ | $ | ||||||
| F-25 |
Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:
Schedule of Income Taxes Paid(Net of Refunds Received)
| 2025 | ||||
| Federal | $ | |||
| State | ||||
| Foreign | ||||
| Cash paid for income taxes, net of refunds received | $ | |||
Nova LifeStyle, Inc. and Diamond Bar are subject to U.S. federal and state income taxes. Nova Furniture BVI is incorporated in the BVI. There is no income tax for a company domiciled in the BVI. Accordingly, the Company’s consolidated financial statements do not present any income tax provision related to the BVI tax jurisdiction where Nova Furniture BVI is domiciled.
For
U.S. Federal income tax purpose, the Company has net operating loss, or NOL carryforwards of approximately $
For
U.S. California income tax purpose, the Company has net operating loss, or NOL carryforwards of approximately $
Malaysia has net operating loss, or NOL carryforwards of approximately $
Corporate
income tax in Malaysia is calculated at the statutory rate of
Note 13 – 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 $
| F-26 |
Note 14 – 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.
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 $
| F-27 |
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, Nova LifeStyle, Inc. (the “Company”) and Nova Furniture Limited (Samoa), a wholly owned subsidiary of the
Company (“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 $
On
October 25, 2024, Nova LifeStyle, Inc. (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, Nova LifeStyle, Inc. (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, Nova LifeStyle, Inc. (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, Nova LifeStyle, Inc. (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 $
| F-28 |
On
February 26, 2025, Nova LifeStyle, Inc. (the “Company”) and Nova Furniture Limited (Samoa), a wholly owned subsidiary of
the Company (“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, Nova LifeStyle, Inc. (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, Nova Lifestyle, Inc., a Nevada corporation (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 $.
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. 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 $
| F-29 |
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
$
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 year ended December 31, 2025:
Summary of Warrant Activity
| Number of Warrants | Average Exercise Price | Weighted Average Remaining Contractual Term in Years | ||||||||||
| Outstanding at January 1, 2025 | $ | |||||||||||
| Exercisable at January 1, 2025 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised / surrendered | ||||||||||||
| Expired | - | |||||||||||
| Outstanding at December 31, 2025 | $ | |||||||||||
| Exercisable at December 31, 2025 | $ | |||||||||||
Shares Issued to Consultants
On
January 28, 2023, the Company entered into an advisory service agreement with a designer for advising furniture design concept and development
effective on February 1, 2023 for
| F-30 |
On
July 3, 2023, the Company entered into an IT consulting service agreement with three consultants for analyzing the Company’s IT
infrastructure and system effective on July 3, 2023 for
On
November 9, 2023, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on
November 16, 2023 for a one-year term. The Company agreed to grant the consultant shares of the Company’s common stock,
vesting % on February 15, 2024, % on May 15, 2024, % on August 15, 2024 and % on November 15, 2024. The fair value of the
shares was $
On
January 23, 2024, Nova Malaysia entered into a purchase agreement with an IT consulting firm to acquire an AI-Calculation Engine System,
which includes Commission Management Calculation Module, Compiled and Encrypted Calculation Engine,
Membership Module, Sales Module and Maintenance and Support, etc. for $
On
January 28, 2024, the Company entered into an advisory service agreement with a designer for advising furniture design concept and
development effective on February 1, 2024 for twelve
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
| F-31 |
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 and Options Issued to Independent Directors
On
November 7, 2018 (the “Grant Date”), the Company entered into stock option agreements under the 2014 Omnibus Long-Term Incentive
Plan with the three independent members of the board of directors. The Company agreed to grant the Company’s three independent
directors’ options to purchase an aggregate of shares of the Company’s common stock at an exercise price of $
per shares, with a term of years. Twenty-five percent (%) of those stock options vested on November 30, 2018, % on will vest on
February 28, 2019, % on May 31, 2019, and the remaining % will vest on August 31, 2019. The fair value of the stock options granted
is estimated on the date of the grant using the Black-Scholes option pricing model (“BSOPM”) as described above. The fair
value of the options was calculated using the following assumptions: estimated life of ten years, volatility of %, risk free interest
rate of %, and dividend yield of %. The fair value of stock options was $
On
November 4, 2019, the Company entered into stock option agreements under the 2014 Omnibus Long-Term Incentive Plan with the three independent
members of the board of directors. The Company agreed to grant the Company’s three independent directors options to purchase an
aggregate of shares of the Company’s common stock at an exercise price of $ per share, with a term of years, vesting
% on November 30, 2019, % on February 28, 2020, % on May 31, 2020, and % on August 31, 2020. The fair value of the stock options
granted was estimated on the date of the grant using the Black-Scholes option pricing model. The fair value of the options was calculated
using the following assumptions: estimated life of , volatility of %, risk free interest rate of %, and dividend yield
of %. The fair value of the stock options was $
All of above options to the members of the board of directors of the Company were expired during 2024 or earlier.
Shares Issued to Employees
On
November 9, 2023, the Company extended an employment agreement with the Company’s Corporate Secretary for a term of one year effective
from November 14, 2023. The Company agreed to grant an award of restricted Stock Units to the officer pursuant to the Company’s
2021 Omnibus Equity Plan. The fair value of these shares was $
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 $
| F-32 |
Options Issued to Employees
On August 24, 2018, the compensation committee of the Board approved an option grant to the Company’s Chief Financial Officer to purchase an aggregate of shares of the Company’s common stock at an exercise price of $ per share, with a term of years, pursuant to the Company’s 2014 Omnibus Long-Term Incentive Plan. Fifty percent (%) of those stock options vested immediately, and the remaining % vested on the six-month anniversary of the grant date.
The
fair value of the option granted to the Chief Financial Officer in 2018 was recognized as compensation expense over the vesting period
of the stock option award. The fair value of the option was calculated using Black-Scholes model under the following assumptions: estimated
life of , volatility of %, risk free interest rate of %, and dividend yield of %. The fair value of the stock
options was $
On August 12, 2019, the compensation committee of the Board approved an option grant to the Company’s Chief Financial Officer to purchase an aggregate of shares of the Company’s common stock at an exercise price of $ per share, with a term of years, pursuant to the Company’s 2014 Omnibus Long-Term Incentive Plan. Fifty percent (%) of those stock options vested immediately, and the remaining % vested on the six-month anniversary of the grant date.
The
fair value of the option granted to the Chief Financial Officer in 2019 was recognized as compensation expense over the vesting period
of the stock option award. The fair value of the option was calculated using Black-Scholes model under the following assumptions: estimated
life of , volatility of %, risk free interest rate of %, and dividend yield of %. The fair value of the stock
options was $
All of above options to Chief Financial Officer were expired during 2024 or earlier.
As of December 31, 2025, unrecognized share-based compensation expense was $.
Note 15 – Geographical Analysis
Geographical distribution of sales consisted of the following for the years ended December 31, 2025 and 2024:
Schedule of Revenue by Geographic Areas
| 2025 | 2024 | |||||||
| Geographical Areas | ||||||||
| North America | $ | $ | ||||||
| Hong Kong | ||||||||
| Other countries | ||||||||
| Revenues | $ | $ | ||||||
Geographical location of identifiable long-lived assets as of December 31, 2025 and 2024:
Schedule of Long-lived Assets by Geographic Areas
| 2025 | 2024 | |||||||
| Geographical Areas | ||||||||
| North America | $ | $ | ||||||
| Asia | ||||||||
| Total | $ | $ | ||||||
Note 16 – 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
| F-33 |
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 11) on monthly or annual terms.
On
July 15, 2019, Nova Malaysia entered into a sublease agreement for warehouse space with a two-year
On
October 29, 2019, Nova Malaysia entered into a lease agreement for a showroom with a two-year
On
August 20, 2020, Nova Malaysia entered into a sublease agreement for an office and service center with a two-year
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
Operating lease expense for the years ended December 31, 2025 and 2024 was as follows:
Schedule of Lease Cost
| 2025 | 2024 | |||||||
| Operating lease cost – straight line | $ | $ | ||||||
The following is a schedule, by years, of maturities of operating lease liabilities as of December 31, 2025:
Schedule of Operating Lease Liability Maturity
| Operating Leases | ||||
| 2026 | $ | |||
| Thereafter | ||||
| Total undiscounted cash flows | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
| F-34 |
Lease Term and Discount Rate
Schedule of Lease Term and Discount Rate
| December 31, 2025 | ||||
| Weighted-average remaining lease term – years | ||||
| Operating leases – USA | ||||
| Operating leases – Malaysia | - | |||
| Weighted-average discount rate (%) | ||||
| Operating leases – USA | ||||
| Operating leases – Malaysia | ||||
Supplemental cash flow information related to leases where the Company was the lessee for the years ended December 31, 2025 and 2024 was as follows:
Schedule of Supplemental Cash Flow Information Related to Leases
| 2025 | 2024 | |||||||
| Operating cash outflows from operating leases | $ | $ | ||||||
Finance lease expense for the years ended December 31, 2025 and 2024 was as follows:
Schedule of Finance Lease Expenses
| 2025 | 2024 | |||||||
| Finance lease cost – straight line | $ | $ | ||||||
The following is a schedule, by years, of maturities of finance lease liabilities as of December 31:
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 | ||||
Lease Term and Discount Rate
Schedule of Finance Lease Term and Discount Rate
| December 31, 2025 | ||||
| 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 years ended December 31, 2025 and 2024 was as follows:
Schedule of Supplemental Finance Cash Flow Information Related to Leases
| 2025 | 2024 | |||||||
| Operating cash outflows from finance leases | $ | $ | ||||||
| F-35 |
Note 17 – Commitments and Contingencies
Legal Proceedings
On March 8, 2019, Jie Yuan (the “Jie Action”) filed a putative shareholder derivative lawsuit in the United States District Court for the Central District of California, purportedly on behalf of the Company against its former and current CEOs and CFOs (Thanh H. Lam, Ya Ming Wong, Jeffery Chuang and Yuen Ching Ho) and directors (Charlie Huy La, Bin Liu, Umesh Patel, and Min Su) and vice president (Steven Qiang Liu) (collectively, the “Defendants”). The putative derivative plaintiffs sought to compel reimbursement of Nova for any judgment entered against the Company in the matter of Barney v. Nova Lifestyle, Inc., United States District Court for the Central District of California, and for any legal fees or other costs the Company may incur in defending the Barney Action. The basis of the claims was that the Defendants caused the Company to make alleged false and/or misleading statements that gave rise to the Barney Action.
In the Barney action, the putative class plaintiffs alleged that the Company artificially inflated its share price by issuing a press release announcing a strategic relationship with Shanxi Winqing Senior Care Service Group, claiming in the Company’s Annual Statements on Form 10-Ks for the 2017 and 2018 fiscal years that Shanxi Winqing and Merlino Lewis LLP were among the Company’s largest customers, and reporting revenues from sales transactions with these entities. Plaintiffs claimed that Shanxi Winqing was a fictitious entity and Merlino Lewis LLP dissolved in 2013, so that the announcement of a strategic alliance was false and the reported revenues non-existent. The Company denied these allegations and all liability.
It was also alleged in the Jie Action that President and CEO Lam engaged in self-dealing transactions by leasing real estate to Diamond Bar, a Company subsidiary. Plaintiffs further alleged in conclusory fashion that Ms. Lam, former CEO and director Ya Ming Wong, former CFO and director Yuen Ching Ho, and director Umesh Patel sold securities during the period of time when the alleged false and/or misleading statements were made “with knowledge of material non-public information.”
On May 15, 2019, Wilson Samuels (the “Samuels Action”) filed a largely duplicative putative derivative complaint against the same current and former directors and officers named in the Jie Action other than Steven Qiang Liu. That action was filed in the United States District Court for the Central District of California. In addition to repeating the allegations in the Jie Complaint, Samuels claimed that the Company’s announcement of a change of auditing firms in asserted that it did so because its existing auditor ceased auditing public companies subject to regulation in the United States without disclosing that its new auditing firm was created in a merger of three accounting firms, including a firm whose registration was revoked by the Public Company Accounting Oversight Board. Samuels also claimed that the Company redeemed its stock in reliance upon the same purported fraudulent recognition of revenues claimed in the Barney Action. Samuels purported to state direct claims under Sections 10(b) and 20 of the Exchange Act and SEC Rule 10b-5 on the Company’s behalf.
Both derivative actions were stayed pending resolution of the Barney Action. After Barney was settled (on terms previously reported), the parties filed a stipulation to lift the stay and consolidate the derivative actions. The Stipulation also set deadlines for plaintiffs to file a consolidated amended complaint and for defendants to respond to this complaint. By January 7, 2025 Orders, the Court adopted the parties’ Stipulation.
On February 6, 2025, the deadline for filing an amended complaint, plaintiffs filed a Notice of Dismissal without prejudice. While plaintiffs should have sought Court approval, the Clerk accepted the Notice of Dismissal and the lead case has been marked closed. It appears that the Notice of Dismissal concluded these matters.
Other than the above, the Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition or results of operations.
| F-36 |
Note 18 – Subsequent Events
The Company has evaluated subsequent events through April 14, 2026, the date of the issuance of the consolidated financial statements, and identified the following material subsequent event.
On
January 28, 2026, XMax Inc., a Nevada company (the “Company” or “Lender”) entered into a Loan Agreement (the
“Loan Agreement”) with Joycheer Trade Limited, a company incorporated in Hong Kong (the “Borrower”). Pursuant
to the Loan Agreement, the Lender agreed to provide the Borrower with a loan in an aggregate principal amount of $
On
February 4, 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
February 4, 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
March 9, 2026, XMax Inc. (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, XMax Inc. (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 1, 2026,
the Company incorporated XMax AI Inc. in the State of Nevada. 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$
On March 24, 2026, the Company announced that its Board of Directors has 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 6, 2026, XMax AI Inc. (“XMax AI” or the “Company”), a wholly owned subsidiary of XMax Inc., 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. The Service provider will also provide reasonable configuration and limited customization work as is necessary to make the Platform operational for the Company’s approved use case.
The
total fixed fee for the services under the Agreement is US$
| F-37 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: April 15, 2026 | By: | /s/ Xiaohua Lu |
| Xiaohua Lu | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Xiaohua Lu and Jeffery Chuang, jointly and severally, his or her attorneys-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Xiaohua Lu | Chief Executive Officer and Director | April 15, 2026 | ||
| Xiaohua Lu | (Principal Executive Officer) | |||
| /s/ Jeffery Chuang | Chief Financial Officer | April 15, 2026 | ||
| Jeffery Chuang | (Principal Financial and Accounting Officer) | |||
| /s/ Yizhou (Steven) Zhao | Chief Operating Officer and Director | April 15, 2026 | ||
| Yizhou (Steven) Zhao | ||||
| /s/ Ming-Cherng Sky Tsai | Director | April 15, 2026 | ||
| Ming-Cherng Sky Tsai | ||||
| /s/ Umesh Patel | Director | April 15, 2026 | ||
| Umesh Patel | ||||
| /s/ Wen Tao | Director | April 15, 2026 | ||
Wen Tao
|
||||
| /s/ Matthew Beck | Director | April 15, 2026 | ||
| Matthew Beck |
| 39 |
Exhibit 4.5
Description of the Company’s Common Stock Registered Under Section 12 of the Exchange Act of 1934, as amended
XMax Inc. (the “Company”, “we”, “us” or “our”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) which consists of common stock, $0.001 par value per share (the “Common Stock”). The following is a summary of information concerning our Common Stock. This summary does not purport to be a complete statement of the relevant provisions of the Common Stock and is qualified in its entirety by the provisions of our Articles of Incorporation, as amended (the “Articles of Incorporation”), our Second Amended and Restated Bylaws (“Bylaws”), and applicable provisions of the Nevada Revised Statutes (the “NRS”).
Our authorized capital stock consists of 5,000,000,000 shares of Common Stock, par value $0.001 per share. Currently, we have no other authorized class of stock.
As of April 10, 2026, there were 47,206,227 shares of our Common Stock outstanding, held by approximately 48 stockholders of record. In addition, there are warrants outstanding to purchase 869,890 shares of common stock of the Company as of April 10, 2026. Our Common Stock is currently traded on The NASDAQ Stock Market LLC under the symbol “XWIN”. The transfer agent and registrar for our common stock is Issuer Direct Corporation.
The holders of our Common Stock are entitled to one vote per share. Our Articles of Incorporation do not provide for cumulative voting. The holders of our Common Stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our Common Stock are entitled to share ratably in all assets that are legally available for distribution. The holders of our Common Stock have no preemptive, subscription, redemption or conversion rights.
All issued and outstanding shares of Common Stock are fully paid and nonassessable. Shares of our Common Stock that may be offered for resale, from time to time, under this prospectus will be fully paid and nonassessable.
As a Nevada corporation, we are also subject to certain provisions of the Nevada Revised Statutes (the “NRS”) that have anti-takeover effects and may inhibit a non-negotiated merger or other business combination. These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval of, our board of directors in connection with such a transaction. However, certain of these provisions may discourage a future acquisition of us, including an acquisition in which the stockholders might otherwise receive a premium for their shares. As a result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so. The NRS provides that specified persons who, with or through their affiliates or associates, own, or affiliates and associates of the subject corporation at any time within two years own or did own, 10% or more of the outstanding voting stock of a corporation cannot engage in specified business combinations with the corporation for a period of two years after the date on which the person became an interested stockholder, unless the combination meets all of the requirements of the articles of incorporation of the company, and: (i) the combination or transaction by which such person first became an interested stockholder was approved by the board of directors before they first became an interested stockholder; or (ii) such combination is approved by: (x) the board of directors; and (y) at an annual or special meeting of the stockholders (not by written consent), the affirmative vote of stockholders representing at least 60% of the outstanding voting power not beneficially owned by such interested stockholder. The law defines the term “business combination” to encompass a wide variety of transactions with or caused by an interested stockholder, including mergers, asset sales and other transactions in which the interested stockholder receives or could receive a benefit on other than a pro rata basis with other stockholders.
Exhibit 21.1
XMax Inc. and subsidiaries as of December 31, 2025
| Subsidiary Name | Jurisdiction of Incorporation | Percentage Owned | ||||
| Diamond Bar Outdoors, Inc. | California, U.S. | 100 | % | |||
| Nova Furniture Limited | British Virgin Islands | 100 | % | |||
| Nova Furniture Limited (Samoa) | Samoa | 100 | % | |||
| i Design Blockchain Technology, Inc.* | California, U.S. | 100 | % | |||
| Xmax Capital Ltd. | Samoa | 100 | % | |||
| Xmax Alpha Holdings Ltd.* | Cayman Islands | 100 | % | |||
| Xmax Beta Holdings Ltd.* | Cayman Islands | 100 | % | |||
| Xmax Delta Holdings Ltd.* | Cayman Islands | 100 | % | |||
| Xmax Sigma Holdings Ltd.* | Cayman Islands | 100 | % | |||
* Indicates subsidiary of a subsidiary.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
XMAX Inc.
We hereby consent to the incorporation by reference in the Registration Statements on Form S-1 (File No. 333-287559) and Form S-3 (File Nos. 333-283177, 333-279796, 333-274970, 333-261343, 333-249384 and 333-219263) and Form S-8 (File Nos. 333-283515, 333-276082, 333-257139 and 333-197735) of XMAX Inc. (formerly known as Nova LifeStyle, Inc.) and subsidiaries (collectively the “Company”) of our report dated April 15, 2026, relating to the Company’s consolidated statements which appears in this Annual Report on Form 10-K of the Company for the year ended December 31, 2025.
/s/Enrome LLP
Singapore
April 15, 2026
PCAOB ID: 6907
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Xiaohua Lu, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2025, 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: April 15, 2026 | By: | /s/ Xiaohua Lu |
| Xiaohua Lu | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Jeffery Chuang, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2025, 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: April 15, 2026 | By: | /s/ Jeffery Chuang |
| Jeffery Chuang | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Xiaohua Lu, Chief Executive Officer of XMAX Inc., certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of XMAX Inc. for the fiscal year ended December 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of XMAX Inc.
| Date: April 15, 2026 | By: | /s/ Xiaohua Lu |
| Xiaohua Lu | ||
| Chief Executive Officer |
The foregoing certifications are not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are not to be incorporated by reference into any filing of XMAX Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
A signed original of this written statement required by Section 906 has been provided to XMAX Inc. and will be retained by XMAX Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATIONS OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeffery Chuang, Chief Financial Officer of XMAX Inc., certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of XMAX Inc. for the fiscal year ended December 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of XMAX Inc.
| Date: April 15, 2026 | By: | /s/ Jeffery Chuang |
| Jeffery Chuang | ||
| Chief Financial Officer |
The foregoing certifications are not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are not to be incorporated by reference into any filing of XMAX Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
A signed original of this written statement required by Section 906 has been provided to XMAX Inc. and will be retained by XMAX Inc. and furnished to the Securities and Exchange Commission or its staff upon request.