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What changed in XMax Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of XMax Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+306 added−253 removedSource: 10-K (2026-04-15) vs 10-K (2025-03-31)

Top changes in XMax Inc.'s 2025 10-K

306 paragraphs added · 253 removed · 157 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

39 edited+15 added−10 removed56 unchanged
Biggest changeDiamond 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 100.0% and 82.4% of our total sales for 2024 and 2023, respectively, and Nova Malaysia’s revenues accounted for 0.0% and 17.6% of our total sales for 2024 and 2023, respectively.
Biggest changeWe 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.
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 the North America, Central America, South America, Asia, and the Middle East.
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.
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. 3 Table of Contents 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 selling our Jade Mats in Malaysia through Nova Malaysia.
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. 3 Table of Contents 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.
While previous tariffs on Chinese 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.
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.
Our organizational structure as of December 31, 2024 is set forth in the diagram: 2 Table of Contents 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.
Our organizational structure as of December 31, 2025 is set forth in the diagram: 2 Table of Contents 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.
Some common risks include: (i) Economic Instability: Fluctuations in the economy 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.
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.
Nova LifeStyle 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.
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.
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. No customer accounted for greater than 10% of our total sales in 2024 and one customer accounted for 18% of our total sales in 2023, respectively.
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 have used independent designers in the past for product design, from which we built prototype furniture pieces for refinement and testing. During 2024 and 2023, Nova Malaysia spent $2.00 million and $3.12 million on developing Virtual and Augmented reality software and AI system for potential consulting business.
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.
We offer a wide selection of stand-alone furniture pieces across a variety of product categories and approximately over 63 products developed exclusively for the international markets.
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.
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 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 September 5, 2023, Nova LifeStyle, Inc., a Nevada corporation (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.
On September 5, 2023, the Compan y 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.
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, 2024, we had 27 full time employees worldwide.
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 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 2024, we sold products into approximately 11 countries worldwide, with North America as our principal international market, while we expanded our sales in other regions.
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.
The Company and our subsidiaries currently hold two trademarks registered in the U.S. related to the “Diamond Sofa” brand. 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.
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.
Our largest selling product categories for the year ended December 31, 2024 were sofas, beds and coffee tables, which accounted for approximately 50%, 13% and 8% of sales from continuing operations, respectively.
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.
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.
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.
Our products principally compete in the U.S., Canada, Honduras, Jamica, Puerto Rico, Colombia, Mexico, Cayman Islands, Saudi Arabia, Kuwait and Malaysia and Middle Eastern markets. The primary competitive factors in these markets for our products and target consumers are price, quality, style, marketing, functionality and availability.
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.
Employees As of December 31, 2024, we had 27 full time employees worldwide. Our U.S. corporate office and operations employed 24 full-time employees, our location in Malaysia employed 3 full-time employees, respectively. We believe that relations with our employees are satisfactory. We have no collective bargaining agreements with our employees.
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.
In 202 4 , our products were sold in 11 countries worldwide, with North America as our principal international market. Sales to North America accounted for 97.4% and 79.1% of our total sales for 2024 and 2023, respectively. Sales to other regions accounted for 2.6% and 20.9% of our total sales for 2024 and 2023, respectively.
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.
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. The furniture wholesale business faces several risks that can impact its operations and profitability.
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.
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.
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.
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.
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.
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.
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.
Our U.S. corporate office and operations employed 24 full-time employees, our location in Malaysia employed 3 full-time employees, respectively. We believe that relations with our employees are satisfactory. We have no collective bargaining agreements with our employees. 1 Table of Contents Our History We are a U.S. holding company that operates through several wholly-owned subsidiaries.
We believe that relations with our employees are satisfactory. We have no collective bargaining agreements with our employees. 1 Table of Contents 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.
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. One of our principal suppliers of finished goods in 2024 accounted for approximately 16% of our total purchases from operations for 2024.
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.
Operations of Bright Swallow were reported as discontinued operations in the accompanying consolidated financial statements for all periods presented. 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.
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.
We design and market residential and commercial furniture products worldwide. Our subsidiaries include Nova Furniture Limited in the British Virgin Islands (“Nova Furniture”), Nova Furniture Limited in Samoa (“Nova Samoa”), Diamond Bar Outdoors, Inc. (“Diamond Bar”), I Design Blockchain Technology, Inc (“i Design”), Nova Living (M) SDN. BHD. (“Nova Malaysia”) and Nova Living (HK) Group Limited (“Nova HK”).
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.
Furniture Industry Regulations and Standards We and our products are subject to U.S. and international regulations related to the furniture industry.
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.
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.
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.
Item 1. Business Our Company Nova LifeStyle, Inc. (“Nova LifeStyle” or the “Company”) is a U.S.-headquartered innovative designer and marketer of contemporary styled residential and commercial furniture formerly known as Stevens Resources, Inc. We were incorporated in the State of Nevada on September 9, 2009.
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.
The Company’s products are marketed through wholesale and retail channels as well as various online platforms worldwide. Nova LifeStyle’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.
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.
The entire system is far from complete as it requires to integrate with other components in order to be functional. It is still in development stage and not in operation. In 2024 and 2023, we invested $2.00 million and $3.12 million, respectively, on research and development expense. We may increase future investments in R&D based on our growth needs.
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.
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.
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.
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.
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.
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 $2.50 million, pursuant to a formal agreement entered into on January 7, 2020. We received the payment on May 11, 2020.
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.
In addition, we anticipate increasing internet sales under the Diamond Sofa brand through third-party shopping portals and Nova Malaysia’s website. 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.
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.
Trade and Tariff On February 1, 2025, President Trump issued executive orders imposing a 25% tariff on products imported from Canada and Mexico (initially suspended for 30 days) and a 10% tariff on products imported from China, effective February 4, 2025. An additional 10% increase in the China tariffs became effective March 4, 2025.
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.
Diamond Bar is a California corporation organized on June 15, 2000, which we acquired pursuant to a stock purchase agreement on August 31, 2011. On April 24, 2013, we acquired all of the outstanding stock of Bright Swallow International Group Limited (“Bright Swallow”).
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.
Removed
On September 23, 2016, Nova Furniture, a wholly-owned subsidiary of the Company (the “Seller”), entered into a Share Transfer Agreement (the “Agreement”) with Kuka Design Limited, an unrelated company incorporated in British Virgin Islands (“Kuka Design BVI” or “Buyer”).
Added
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.
Removed
Pursuant to the terms of the Agreement, 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 the Buyer for a total of $8,500,000 (the “Transaction”).
Added
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.
Removed
Upon consummation of the Transaction on October 25, 2016, the Buyer became the sole owner of Nova Dongguan. On November 10, 2016, Nova Furniture entered into a Trademark Assignment Agreement with Kuka Design BVI (“Assignee”).
Added
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.
Removed
Pursuant to the terms of the Trademark Assignment Agreement, Nova Furniture assigned the Assignee its full right to, and title in, the NOVA trademark in China for $6,000,000. On December 7, 2017, Nova LifeStyle, Inc. incorporated i Design under the laws of the State of California, USA. The purpose of i Design is to build our own blockchain technology team.
Added
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.
Removed
This new company will focus on application of blockchain technology in the furniture industry, including encouraging and facilitating interactions among designers and customers, and building blockchain-powered platform that enables designers to showcase their products including current and future furniture designs. This company is in a planning stage and has had minimum operations to date.
Added
(“ 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.
Removed
For the year ended December 31, 2023, our largest selling product categories were sofas, beds and chairs, which accounted for approximately 37%, 18% and 13% of sales from continuing operations, respectively.
Added
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.
Removed
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.
Added
(“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.
Removed
Sales to North America accounted for 97.4% and 79.1% of our total sales from continuing operations for 2024 and 2023, respectively. The change was attributed principally to our changing sales and marketing strategy to focus on sales in the U.S.
Added
(“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.
Removed
Sales to other regions accounted for 2.6% and 20.9% of our total sales from continuing operations for 2024 and 2023, respectively. We expect that a majority of our revenues will continue to come from our sales to the U.S.
Added
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.
Removed
Tariffs on imports from Canada and Mexico became effective March 4, 2025, but were later subject to broad exemptions effective March 7, 2025.
Added
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.
Added
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.
Added
The furniture wholesale business faces several risks that can impact its operations and profitability.
Added
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.
Added
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.
Added
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”.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

33 edited+46 added−44 removed123 unchanged
Biggest changeIf our common stock were to be delisted, the liquidity of our common stock would be materially adversely affected and the market price of our common stock could decrease. 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.
Biggest changeWe 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.
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.
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.
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. 11 Table of Contents 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.
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. 12 Table of Contents 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.
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. 14 Table of Contents 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.
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. 15 Table of Contents 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.
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. 17 Table of Contents 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.
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. 18 Table of Contents 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.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. 13 Table of Contents 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.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. 14 Table of Contents 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.
If we are unable to protect our proprietary rights adequately, it would have a negative impact on our operations. 12 Table of Contents 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.
If we are unable to protect our proprietary rights adequately, it would have a negative impact on our operations. 13 Table of Contents 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.
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. 15 Table of Contents 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.
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. 16 Table of Contents 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 loss of personnel or our inability to hire or retain sufficient personnel at competitive rates could impair the growth of our business. 8 Table of Contents 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 loss of personnel or our inability to hire or retain sufficient personnel at competitive rates could impair the growth of our business. 9 Table of Contents 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.
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, 2024. See “Item 9A.
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.
In 2024 and 2023, 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.
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.
We might loss 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.
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.
We are a holding company with no material assets other than the stock of our wholly owned subsidiaries, Diamond Bar, Nova Furniture, Nova Samoa and Nova Malaysia.
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.
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. 10 Table of Contents Our dependence on foreign suppliers and our increased global operations subject us to a variety of risks and uncertainties that could impact our operations and financial results.
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. 11 Table of Contents Our dependence on foreign suppliers subject us to a variety of risks and uncertainties that could impact our operations and financial results.
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 been named in a putative securities class action case and two derivatives cases, details See Item 3 Legal Proceedings.
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.
The international trade policies of China and the U.S. could adversely affect 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. will increase our costs and decrease our earnings.
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.
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.
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.
But we had no sales to a customer greater than 10% of our total sales in 2024 and one customer accounted for 18% of our total sales in 2023.
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.
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.
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.
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 due to, among other things, trade disputes and tariffs, the COVID-19 outbreak, sanctions imposed by the U.S.
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.
Chuang 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 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.
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. Short sellers of our stock may be manipulative and may drive down the market price of our common stock.
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.
Chuang 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 Ms. Lam and Mr.
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.
If we are unable to develop enough new clients for our high profit margin products, our sales and net income will be negatively impacted. 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.
If we are unable to develop enough new clients for our high profit margin products, our sales and net income will be negatively impacted.
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.
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 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 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.
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.
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 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.
Our success also depends upon our ability to anticipate and respond in a timely manner to fashion trends related to residential and commercial furniture.
Failure to achieve any of these goals will prevent us from managing our growth in an effective manner and could have a material adverse effect on our business, financial condition or results of operations. 9 Table of Contents 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.
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. 10 Table of Contents 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.
We rely heavily on the expertise, experience and continued services of our senior management, including our Chief Executive Officer, President, Director and Chairperson, Ms. Lam, and our Chief Financial Officer, Mr. Chuang. Loss of their services could adversely affect our ability to achieve our business objectives. Ms. Lam and Mr.
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.
On October 13, 2023, we renewed a shelf registration statement on Form S-3 under which we may, from time to time, sell securities in one or more offerings up to a total dollar amount of $55,000,000. The shelf registration statement was declared effective as of October 23, 2023.
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.
Our Articles of Incorporation, as amended, authorize the issuance of up to 250,000,000 shares of common stock, par value $0.001 per share. As of March 28, 2025, there were 236,792,678 authorized and unissued shares of our common stock available for future issuance, based on 13,207,322 shares of our common stock issued and outstanding.
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.
Tariffs passed on to consumers through higher prices can also negatively impact consumer confidence and discretionary spending. During this time period we will continue to seek alternatives and new resources to increase the revenue. 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.
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.
Removed
If we are unable to manage our growth, we may not be profitable. Our continued success depends, in part, upon our ability to manage and expand our operations and facilities in the face of continued growth.
Added
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.
Removed
This planned growth includes the expansion of our internet sales and diversifying our international sales by expanding our broad network of distributors, increasing direct sales in the U.S. and other international markets and entering emerging growth markets. The growth in our operations has placed, and may continue to place, significant demands on our management, operational and financial infrastructure.
Added
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.
Removed
If we do not manage our growth effectively, the quality of our products and services could suffer, which could negatively affect our operating results. To manage this growth effectively, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures.
Added
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.
Removed
We cannot assure you that we will be able to fulfill our staffing requirements for our business, successfully train and assimilate new employees, or expand our management base and enhance our operating and financial systems.
Added
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.
Removed
A delay in getting non-U.S.-sourced products through port operations and customs in a timely manner could result in reduced sales, canceled sales orders and unanticipated inventory accumulation. Our business depends on our ability to source and distribute products in a timely manner. As a result, we rely on the free flow of goods through open and operational ports worldwide.
Added
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.
Removed
Supply chain disruption and port congestions caused by COVID-19 have caused delay of shipment and delivery of our products. Any disruptions at ports create significant risks for our business, particularly if work slowdowns, quarantines, lockdowns, strikes or other disruptions occur during our peak importing seasons.
Added
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.
Removed
Any of these factors could result in reduced sales, canceled sales orders and unanticipated inventory accumulation and have a material adverse effect on our operating results, financial position and cash flows. We depend on vendors and suppliers outside the U.S.
Added
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. 8 Table of Contents The legal and regulatory landscape for AI is rapidly evolving and uncertain.
Removed
On February 1, 2025, President Trump issued executive orders imposing a 25% tariff on products imported from Canada and Mexico (initially suspended for 30 days) and a 10% tariff on products imported from China, effective February 4, 2025. An additional 10% increase in the China tariffs became effective March 4, 2025.
Added
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.
Removed
Tariffs on imports from Canada and Mexico became effective March 4, 2025, but were later subject to broad exemptions effective March 7, 2025.
Added
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.
Removed
Department of Treasury on certain officials of the Hong Kong Special Administrative Region and the central government of the PRC and the executive orders issued by then U.S. President that prohibit certain transactions with certain Chinese companies and their applications.
Added
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.
Removed
Controversies may arise in the future between these two countries. These controversies also could make it more difficult for us to provide our products to our customers in the U.S. and China.
Added
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.
Removed
The Company started to source certain of its new products from manufacturers in India in 2020. Sales during this stage may also be impacted by this shift in behavior.
Added
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.
Removed
The U.S. government previously has the increased tariffs of 25% for the furniture products from China, and it also imposed a 10% tariff on products imported from China, effective February 4, 2025. An additional 10% increase in the China tariffs became effective March 4, 2025.
Added
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.
Removed
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.
Added
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.
Removed
Our financial statements contained in the annual report on Form 10-K for the year ended December 31, 2021 have been audited by Centurion ZD CPA & Co. (“ Centurion ZD”), an independent registered public accounting firm that is headquartered in Hong Kong.
Added
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.
Removed
Centurion ZD, is a firm registered with the PCAOB, and is required by the laws of the U.S. to undergo regular inspections by the PCAOB to assess its compliance with the laws of the U.S. and professional standards.
Added
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.
Removed
However, because Centurion ZD. is based in Hong Kong, a jurisdiction where the PCAOB was unable to conduct inspections without the approval before December 2022, Centurion ZD and its audit work were not inspected independently and fully by the PCAOB.
Added
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.
Removed
Centurion ZD is headquartered in Hong Kong and was included in the PCAOB Determinations. On October 7, 2022, the Company dismissed its independent accountant, Centurion ZD.
Added
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.
Removed
On October 6, 2022, the Audit Committee of the Board of Directors of the Company and the Board of Directors of the Company, resolved to, and did, cause the Company to engage WW as the Company’s independent auditor for the fiscal year ending December 31, 2022.
Added
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.
Removed
WWC is located in the United States and has not been identified by the PCAOB as a firm that the PCAOB is unable to fully inspect and investigate.
Added
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.
Removed
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. Shares of our common stock lack a significant trading market, which could make it more difficult for an investor to sell our common stock.
Added
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.
Removed
Our common stock is traded on The NASDAQ Stock Market LLC. However, there is no assurance that an active trading market in our common stock will be sustained. As a result, an investor may find it more difficult to dispose of our common stock.
Added
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.
Removed
The NASDAQ Stock Market LLC has requirements that a company must meet in order to remain listed on NASDAQ. In particular, NASDAQ rules require us to maintain a minimum bid price of $1.00 per share of our common stock.
Added
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.
Removed
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”).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+1 added−1 removed4 unchanged
Biggest changeAs of date of this report, there has been no previous cybersecurity incidents, have materially affected the Company yet. The independent director of the Board Charlie La is responsible for the oversight of risks from cybersecurity threats on behalf of the Board. Mr.
Biggest changeAs of date of this report, there has been no previous cybersecurity incidents, have materially affected the Company yet. The independent director of the Board Umesh Patel is responsible for the oversight of risks from cybersecurity threats on behalf of the Board. Xiaohua Lu, Chief Executive Officer of the Company report to Mr.
Removed
Teng Ai Leng, our IT consultant and Tawny Lam, Chief Executive Officer of the Company report to Mr. Charlie La and Board of Directors for cybersecurity risks and incidents . Teng AI Leng has 30 years of working experience in the Information technology industry.
Added
Unmesh Patel and Board of Directors for cybersecurity risks and incidents .

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeSee Note 15 to our consolidated financial statements contained herein, which discloses lease agreements. 18 Table of Contents
Biggest changeSee Note 16 to our consolidated financial statements contained herein, which discloses lease agreements. 19 Table of Contents
Nova Malaysia is 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.
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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed17 unchanged
Biggest changeOther 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. 19 Table of Contents PART II
Biggest changeOther 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. 20 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed3 unchanged
Biggest changeMarket 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 under the symbol “NVFY.” On March 28, 2025, the closing price for our common stock as reported on the NASDAQ Stock Market was $0.71 per share.
Biggest changeMarket 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 March 28, 2025, there were approximately 60 holders of record based on information provided by our transfer agent.
Holders of Record On April 10, 2026, there were approximately 48 holders of record based on information provided by our transfer agent.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+87 added−41 removed49 unchanged
Biggest changeThe decrease in cash outflow was partially offset by increase in cash outflow of $3.19 million for inventories to $0.67 million cash outflow for the year ended December 31, 2024, from $2.53 million cash inflow for the same year of 2023, such increase in cash outflow being mainly due to more purchases were made from our suppliers for the year ended December 31, 2024 .
Biggest changeThe 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.
Other Long-Term Liabilities As of December 31, 2024, 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.
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.
The Company is currently evaluating the impact that the adoption of ASU 2023-01 will have on our consolidated financial statement presentations and disclosures. 27 Table of Contents 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).
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).
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 audited consolidated statements of operations.
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.
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.
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.
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, 2024 and 2023, unrecognized tax benefits were approximately nil and nil, respectively .
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.
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, 2024, we do not have any credit facilities.
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.
Net sales to customers by geographic area are determined by reference to the physical product shipment delivery locations requested by our customers.
Sales to customers by geographic area are determined by reference to the physical product shipment delivery locations requested by our customers.
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. 25 Table of Contents Revenue from product sales is recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers.
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.
Some of our manufacturing will continue to be performed in China because 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.
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.
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, 2024.
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.
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. 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.
(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. 27 Table of Contents 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.
The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was nil as of December 31, 2024 and 2023.
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.
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, 2024 and 2023.
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 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, 2024 and 2023, 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.
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.
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 tariffs imposed by the United States on certain products manufactured in China; and (iv) high interest rate, inflation and slow- down in real estate market.
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.
As of December 31, 2024, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately 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.
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.
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, collections of accounts receivable, and credit facilities from banks. We rely primarily on internally generated cash flow and available working capital to support growth.
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.
Based on our historical records and in normal circumstances, we generally receive goods within 4 to 6 months from the date the advance payment is made. Income Taxes Income taxes are accounted for using an asset and liability method.
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. 26 Table of Contents Income Taxes Income taxes are accounted for using an asset and liability method.
Results of Operations Comparison of Years Ended December 31, 2024 and 2023 The following table sets forth the results of our operations for the years ended December 31, 2024 and 2023.
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.
A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the nine months ended December 31, 2024 and 2023, is as follows: Gross UTB 2024 2023 Balance – January 1 Foreign exchange adjustment Balance – December 31 $ - $ - At December 31, 2024 and 2023, the Company had cumulatively accrued approximately nil and nil for estimated interest and penalties related to unrecognized tax benefits.
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.
In response to the tariffs imposed by the United States on products manufactured in China, we are in the process of 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 unaffected by the tariffs.
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.
Amendments to Articles of Incorporation On September 5, 2023, the Company filed the Certificate of Change (the “Amendment”) with the Secretary of State for the State of Nevada to amend its Articles of Incorporation to increase the amount of authorized shares of its common stock, par value $0.001 per share, from 3,000,000 to 250,000,000.
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.
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.
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.
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 Nova LifeStyle and its subsidiaries, Diamond Bar, i Design, Nova Furniture, Nova Samoa, Nova Malaysia and its former subsidiary, Nova HK.
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.
Through our global network of retailers, e-commerce platforms, stagers and hospitality providers, Nova LifeStyle also sells (through an exclusive third-party manufacturing partner) a managed variety of high quality bedding foundation components.
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.
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.
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”).
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.
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. 22 Table of Contents 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 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.
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.
Nova LifeStyle’s brand family currently includes Nova LifeStyle, Diamond Sofa ( www.diamondsofa.com ) and Nova Living. 20 Table of Contents 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’s brand family currently includes Nova LifeStyle, Diamond Sofa ( www.diamondsofa.com ) and Nova Living. 21 Table of Contents 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.
The ratio of current assets to current liabilities was 1.56-to-1 at December 31, 2024.
The ratio of current assets to current liabilities was 4.92-to-1 at December 31, 2025.
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 $2,849,236 at December 31, 2024, an increase of $2,789,179 from net working capital of $60,057 at December 31, 2023.
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.
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.
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.
Operating expenses were $9.61 million for the year ended December 31, 2024, compared to $10.59 million for the same year of 2023. Selling expenses decreased by 36%, or $0.86 million, to $1.56 million for the year ended December 31, 2024, from $2.42 million for the same year of 2023, primarily due to decreased marketing and advertising expenses.
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.
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 and being more aware of actual consumer tastes and how best to fulfill and engage that need.
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.
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. We currently believe that our financial resources will be adequate to finance our operations in the next 12 months.
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.
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, but a portion of suppliers manufacturing our products has been transitioned to Malaysia and India starting in 2020 and we expect that more of our manufacturing will be transitioned to one or more of these venues.
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.
This decrease in net sales resulted primarily from 39% decrease in sales volume, while partially offset by 43% increase in average selling price. Our three largest selling product categories for the year ended December 31, 2024 were sofas, beds and coffee tables, which accounted for approximately 50%, 13% and 8% of sales, respectively.
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.
The following is a summary of cash provided by or used in each of the indicated types of activities during the year ended December 31, 2024 and 2023: 2024 2023 Cash (used in) provided by: Operating activities $ (1,391,779 ) $ (1,580,247 ) Investing activities (14,121 ) 18,643 Financing activities 1,175,578 - Net cash used in operating activities was $1.39 million for the year ended December 31, 2024, a decrease in cash outflow by $0.19 million from $1.58 million of cash used in operating activities for the same year of 2023.
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.
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 audited consolidated financial statements and related disclosures. In January 2025, the FASB issued ASU 2025-01 Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).
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.
Significant estimates and assumptions made by management include, but are not limited to, revenue recognition, the allowance for bad debt, valuation of inventories, the valuation of stock-based compensation, income taxes and unrecognized tax benefits, valuation allowance for deferred tax assets, assumptions used in assessing impairment of long-lived assets and goodwill, and loss contingencies. Actual results could differ from those estimates.
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.
Revenue from product sales is recognized when the customer obtains control of our product, which typically occurs upon shipment to the customer.
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.
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.
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. 30 Table of Contents 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.
Nova LifeStyle 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.
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.
Foreign Currency Translation and Transactions The accompanying audited 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, and i Design. The Company’s subsidiary with operations in Malaysia uses its local currency, Malaysian Ringgit (“RM”), as its functional currency.
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.
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.
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.
Total cost of sales decreased by 21% to $5.44 million for the year ended December 31, 2024, compared to $6.91 million for the same year of 2023. Cost of sales as a percentage of sales decreased to 56% for the year ended December 31, 2024, compared to 62% for the same year of 2023.
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 adoption of ASU 2017-04 did not have any impact on our audited consolidated financial statements. 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).
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. 29 Table of Contents 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).
As of March 18, 2025, 93.4% of accounts receivable outstanding as of December 31, 2024 had been collected. 30 Table of Contents 100% of our accounts receivable outstanding at December 31, 2023 had been collected during the year ended December 31, 2024. As of December 31, 2024 and 2023, we had advances to suppliers of $4,689,148 and $93,740, respectively.
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.
As of March 18, 2025, $28,924 or 0.6% and $93,740 or 100% of our advances to suppliers outstanding at December 31, 2024 and 2023 had been delivered to us in the form of purchases of furniture.
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.
The markets in North America is challenging because such markets are experiencing a slow-down and may be entering a recession due to high interest rate and inflation. 22 Table of Contents 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.
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.
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 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.
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.
We determine the allowance based on historical bad debt experience, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns. 23 Table of Contents 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.
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.
As of December 31, 2024, we had gross accounts receivable of $36,738 of which $4,143 was not yet past due and $3,212 was less than 90 days past due. We had an allowance for expected credit losses of $367.
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.
Sales to North America increased by $0.66 million to $9.44 million for the year ended December 31, 2024, from $8.77 million for the same year of 2023, primary due to more sales order received from our customers in North America. 28 Table of Contents Cost of Sales Cost of sales consists primarily of costs of finished goods purchased from third-party manufacturers.
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.
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.
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.
Our gross profit margin was 44% for the year ended December 31, 2024, compared to 38% for the same year of 2023.
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.
On the other hand, general and administrative expenses increased by 20%, or $1.00 million, to $6.06 million for the year ended December 31, 2024, from $5.06 million for the same year of 2023, primarily due to an increase in consulting fee of $1.17 million and professional fees of $0.05 million, while the increase was partially offset by a decrease in bad debt of $0.19 million and depreciation of $0.30 million.
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 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 7, 2017, we incorporated i Design Blockchain Technology, Inc. (“i Design”) under the laws of the State of California.
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.
In addition, research and development decreased by 36%, or $1.12 million to $2.00 million for the year ended December 31, 2024, from $3.11 million for the same year of 2023, primary due to our spending less on our AI and IT system.
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.
For the year ended December 31, 2023, the three largest selling categories were sofa, jade mats, and beds, which accounted for approximately 37%, 18% and 13% of sales, respectively. The $1.40 million decrease in net sales for the year ended December 30, 2024, compared to the same year of 2023, was mainly due to decreased sales to Asia.
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.
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.
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. 24 Table of Contents 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.
BHD. domiciled in Malaysia (“Nova Malaysia”) and Nova Living (HK) Group Limited domiciled in Hong Kong (“Nova HK”).
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.
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. On November 5, 2020, Nova LifeStyle, Inc. acquired Nova Living (HK) Group Limited (“Nova HK”) which was incorporated in Hong Kong on November 6, 2019. This company had minimal operations.
(“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.
Other Expenses, Net Other expenses, net was $195,736 for the year ended December 31, 2024, compared to other expenses, net of $573,617 for the same period of 2023, representing a decrease in other expenses of $377,881.
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.
For the year ended December 31, 2023, we incurred cash inflow of $18,643 due to disposal of our fixed assets. Net cash provided by financing activities was $1.18 million for the year ended December 31, 2024, compared to nil for the same year of 2023.
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.
The increase in gross profit and gross profit margin was mainly a result of the liquidation sales of the jade mats in Malaysia which came with low profit margin during the year ended December 31, 2023 Operating Expenses Operating expenses consisted of selling, general and administrative expenses, and research and development.
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.
Nova Lifestyle, Inc. and Diamond Bar are subject to U.S. federal and state income taxes. Nova Furniture BVI was incorporated in the BVI and Nova Samoa was incorporated in Samoa. Accordingly, the Company’s consolidated financial statements do not present any income tax provisions related to the BVI and Samoa tax jurisdictions where Nova Furniture BVI and Nova Samoa are domiciled.
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.
Net Loss As a result of the foregoing, our net loss was $5.56 million for the year ended December 31, 2024, compared to $7.72 million for the same year of 2023. 29 Table of Contents 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.
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.
Years Ended December 31, 2024 2023 $ % of Sales $ % of Sales Net sales $ 9,686,975 $ 11,087,459 Cost of sales (5,437,484 ) (56 )% (6,913,902 ) (62 )% Gross profit 4,249,491 44 % 4,173,557 38 % Operating expenses (9,612,846 ) (99 )% (10,592,105 ) (96 )% Loss from operations (5,363,355 ) (55 )% (6,418,548 ) (58 )% Other expenses, net (195,736 ) (2 )% (573,617 ) (5 )% Income tax expenses (2,614 ) - (731,092 ) (7 )% Net loss (5,561,705 ) (57 )% (7,723,257 ) (70 )% Net Sales Net sales for the year ended December 31, 2024 were $9.69 million, a decrease of 13% from $11.09 million for the same year of 2023.
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 )% 31 Table of Contents 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.
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, 2024 RM4.47 to 1 December 31, 2023 RM4.59 to 1 Income statement and cash flow items For the year ended December 31, 2024 RM4.57 to 1 For the year ended December 31, 2023 RM4.56 to 1 26 Table of Contents Segment Reporting ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting.
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 28 Table of Contents 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.
Use of Estimates In preparing consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the dates of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.
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.
As of the date of the report, the Company believes it has regained compliance with the stockholders’ equity requirement based upon the specific transaction referenced.
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).
We maintained an allowance for expected credit loss of $367 and $532 as of December 31, 2024 and December 31, 2023, respectively. During the years ended December 31, 2024 and 2023, expected credit losses provision (reversal) was ($165) and ($2,382), 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.
The decrease in cost of sales in dollar term was mainly due to decreased net sales. The decrease in cost of sales as a percentage of sales is a result of the liquidation sales of the jade mats in Malaysia which came with high cost and low profit margin in the second quarter of 2023.
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.
Sales to Asia decreased by 100% to nil for the year ended December 31, 2024, compared to $2.00 million for the same year of 2023, such decrease mainly due to our liquidation sales of the entire inventory of jade mats by Nova Malaysia for approximately $1.95 million in Malaysia for the year ended December 31, 2023.
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.
Nova Malaysia is incorporated in Malaysia and is subject to Malaysia income taxes at the statutory rate of 24%. Nova Living (HK) Group Limited (“Nova HK”) is incorporated in Hong Kong and is subject to Hong Kong income taxes at the statutory rate of 16.5%. In February 2022, Nova HK was deregistered.
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.
Also, sales to other countries decreased by $79,120 to $251,039 for the year ended December 31, 2024, from $330,159 for the same year of 2023, primarily due to less direct container sales in other countries. However, the decrease in net sales in Asia and other countries was partially offset by the increase in sales to North America.
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.
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. We exited from Jade Mats business in 2023.
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.
Removed
This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

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