Nova LifeStyle(US:NVFY)2025-11-14 21:31Business Operations - The Company sold its entire jade mats inventory for $2.00 million in liquidation sales in June 2023, exiting the jade mats business [232]. - The Company has limited experience with operations in Southeast Asia, requiring considerable management attention and resources [232]. - The Company has a global network of retailers and e-commerce platforms, focusing on middle to high-end private label home furnishings [227]. - The Company is actively seeking to integrate new sources of distribution and manufacturing aligned with its growth strategy [227]. - The Company has shifted some manufacturing from China to countries like Vietnam and India to mitigate tariff impacts, although most production remains in China due to quality concerns [245]. - The Company is focusing on AI-driven smart living solutions, integrating technologies like VR, AR, and AI to enhance its furniture business [245]. - The Company has identified a generational shift in consumer preferences towards high-quality, stylish furniture, which is expected to help maintain gross profit margins [245]. - The Company anticipates long-term growth opportunities through refined product development and marketing strategies targeting high-end customers [245]. Financial Performance - Net sales for the three months ended September 30, 2025, were $9.76 million, an increase of 273% from $2.62 million for the same period in 2024 [299]. - Cost of sales increased by 511% to $8.78 million for the three months ended September 30, 2025, compared to $1.44 million for the same period in 2024, with cost of sales as a percentage of sales rising to 90% [301]. - Gross profit was $0.98 million for the three months ended September 30, 2025, compared to $1.18 million for the same period in 2024, representing a gross profit margin decrease from 45% to 10% [302]. - Operating expenses decreased by 59% to $1.47 million for the three months ended September 30, 2025, from $3.59 million for the same period in 2024 [303]. - Net loss for the three months ended September 30, 2025, was $1.13 million, compared to a net loss of $2.47 million for the same period in 2024 [306]. - Net sales for the nine months ended September 30, 2025, were $14.95 million, an increase of 95% from $7.68 million for the same period in 2024 [309]. - Cost of sales for the nine months ended September 30, 2025, increased by 168% to $11.48 million, with cost of sales as a percentage of sales rising to 77% [311]. - Gross profit for the nine months ended September 30, 2025, was $3.47 million, with a gross profit margin of 23%, compared to 44% for the same period in 2024 [312]. - Operating expenses for the nine months ended September 30, 2025, were $4.35 million, a decrease of 44% from $7.78 million for the same period in 2024 [313]. - Net loss for the nine months ended September 30, 2025, was $1.76 million, compared to a net loss of $4.49 million for the same period in 2024 [316]. Compliance and Regulatory Matters - The Company regained compliance with the $1.00 minimum closing bid price requirement for continued listing on NASDAQ as of May 27, 2025 [236]. - The Company submitted a plan to regain compliance with NASDAQ listing rules by June 6, 2024, after being notified of non-compliance [234]. - The company adopted ASU 2023-07 on segment reporting in 2024, which did not have a material impact on financial statements [286]. - ASU 2023-09, effective for annual periods beginning after December 15, 2024, modifies income tax disclosure rules, which the company adopted in 2025 without material impact [287]. - The company is evaluating the impact of ASU 2023-01 on its consolidated financial statements, effective for fiscal years beginning after December 15, 2023 [289]. - The company is currently assessing the implications of ASU 2024-03 on expense disclosures, effective for annual reporting periods beginning after December 15, 2026 [291]. Capital and Financing - The Company received loan proceeds of approximately $139,802 under the Paycheck Protection Program and $176,294 from Cathay Bank, along with a $150,000 SBA loan [233]. - The Company completed three private placements for gross proceeds of $500,000 during the first six months of 2025 [233]. - The Company has increased its authorized shares from 250 million to 5 billion shares, effective immediately upon filing on November 3, 2025 [243]. - The Company has changed its name from "Nova LifeStyle, Inc." to "XMax Inc." as of November 3, 2025 [244]. - Net cash provided by financing activities was $8.63 million for the nine months ended September 30, 2025, compared to $0.96 million for the same period in 2024 [323]. Assets and Liabilities - As of September 30, 2025, the company had working capital of $7,855,912, an increase of $5,729,385 from $2,106,164 at December 31, 2024 [319]. - Net cash used in operating activities was $2.14 million for the nine months ended September 30, 2025, an increase of $1.00 million from $1.13 million for the same period in 2024 [320]. - The company incurred cash outflow of $5.00 million for investing activities, a significant increase from $0 million in the same period of 2024, primarily for investment in SpaceX [322]. - As of September 30, 2025, gross accounts receivable amounted to $16,440, with $2,709 not yet past due and $2,419 more than 90 days past due [324]. - Advances to suppliers increased to $8,025,174 as of September 30, 2025, up from $4,689,148 at December 31, 2024 [325]. - The company has no off-balance sheet arrangements that could materially affect its financial condition [330]. - There are no financial guarantees or derivative contracts that are not reflected in the consolidated financial statements [331].