NASDAQ: XWIN

In March 2026, the Board of Directors of the Company
approved a strategic expansion into artificial intelligence (“AI”) while continuing to operate and develop its existing furniture
business. The initiative is designed to diversify revenue streams and position the Company for long-term growth amid challenging conditions
in the furniture market. Under the new strategy, the Company plans to enter several high-growth AI segments, including AI software and
hardware development, cloud and GPU compute infrastructure, AI model access and orchestration, and enterprise-focused AI agent deployment.
The Company expects these initiatives to create new technology-driven business lines with scalable commercial potential. To support the
expansion, the Company may raise capital for research and development, strategic partnerships, joint ventures, or acquisitions in AI
and advanced technology sectors. The Company will continue strengthening its core furniture operations as one of its principal business
lines. Pending deployment of capital into specific projects, the Company may also manage its capital through prudent investment strategies
designed to enhance overall capital efficiency and support long-term shareholder value. On April 1, 2026, the Company incorporated XMax
AI Inc. in the State of Nevada. On April 6, 2026, XMax AI Inc. (“XMax AI”) entered into an AI Inference Platform Deployment
and Service Agreement (the “Agreement”) with Cloud Alliance Inc. (the “Service Provider”), effective
as of April 1, 2026. Pursuant to the Agreement, the Service Provider will develop and deploy an AI inference platform (“Platform”)
to the Amazon Web Services (AWS) cloud environment designated by the Company for a total fixed service fee of US$400,000.

Reverse
split

On
December 18, 2019, the Company filed a Certificate of Change with the Secretary of State of Nevada with an effective date of December
20, 2019, at which time a 1-for-5 reverse stock split of the Company’s authorized shares of common stock, par value $0.001, accompanied
by a corresponding decrease in the Company’s issued and outstanding shares of common stock, was effected. On
May 22, 2023, the Company filed a Certificate of Change with the Nevada Secretary of State to effect another 1-for-5 reverse stock
split, accompanied by a corresponding decrease in the Company’s issued and outstanding shares
of common stock.

On
September 5, 2023, the Company filed the Certificate of Change (the “Amendment”) with the Secretary of State for the State
of Nevada to amend its Articles of Incorporation to increase the amount of authorized shares of its common stock, par value $0.001 per
share, from 3,000,000 to 250,000,000. The Amendment was approved by the Company’s Board of Directors (the “Board”)
on June 28, 2023 and by the shareholders at a special meeting of the Company’s shareholders held on August 31, 2023. The Amendment
does not affect the rights of the Company’s shareholders and was effective immediately upon filing.

There
was no change in the par value of our common stock. All references to shares and per share data have been retroactively restated to reflect
such splits.

Human
Capital Resources

We
understand that our success depends on our ability to attract, train and retain our employees. We strive to attract, recruit, and retain
employees through competitive compensation and benefit programs, learning and development opportunities that support career growth and
advancement opportunities, and employee engagement initiatives that foster a strong Company culture. In addition to cash compensation,
we offer customary benefits in accordance with local regulatory requirements as well as stock options to our employees. We also recognize
the importance of keeping our employees safe. In response to the COVID-19 pandemic, we implemented changes that we determined were in
the best interest of our employees and have followed local government orders to prevent the spread of COVID-19. As of December 31, 2025,
we had 22 full time employees, all based in the U.S. We believe that relations with our employees are satisfactory. We have no collective
bargaining agreements with our employees.

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Our
History

We
are a U.S. holding company that operates through several wholly-owned subsidiaries. We design and market residential and commercial
furniture products worldwide. Our subsidiaries include Nova Furniture Limited domiciled in the British Virgin Islands (“Nova
BVI”), Diamond Bar Outdoors, Inc. domiciled in California (“Diamond Bar”), Nova Furniture Ltd. domiciled in Samoa
(“Nova Samoa”) and its wholly owned subsidiaries Nova Living (M) SDN. BHD. domiciled in Malaysia (“Nova
Malaysia”) and i Design Blockchain Technology, Inc. (“i Design”) under the laws of the State of California. We
also have a wholly owned subsidiary Xmax Capital Ltd. (“Xmax Capital”) domiciled in Samoa and its wholly owned
subsidiaries Xmax Alpha Holdings Ltd. (the “Xmax Alpha”), Xmax Beta Holdings Ltd., Xmax Delta Holdings Ltd. and Xmax
Sigma Holdings Ltd., all domiciled in the Cayman Islands.

On
April 24, 2013, we acquired all of the outstanding stock of Bright Swallow International Group Limited (“Bright
Swallow”). On September 23, 2016, Nova Furniture, a wholly-owned subsidiary of the Company (the “Seller”), sold
all of the outstanding equity interests in Nova Furniture (Dongguan) Co., Ltd. (“Nova Dongguan”), a company incorporated
in China and a wholly owned subsidiary of the Seller, to an unrelated third party.

On December 7, 2017, we incorporated i Design under the laws
of the State of California. The purpose of i Design is to build our own blockchain technology team, however, the business of i Design
has not been developed and has had minimum operations to date. On
December 12, 2019, Nova LifeStyle, Inc. acquired Nova Malaysia which was incorporated in Malaysia on July 26, 2019. Nova Malaysia was
acquired to market and sell high-end physiotherapeutic jade mats for use in therapy clinics, hospitality, and real estate projects in
Malaysia and other regions in Southeast Asia. Due to the negative impact caused by COVID-19, we eventually sold the entire jade mats inventory in liquidation sales
in June 2023 and existed from Jade Mats business. Nova Malaysia ceased its business operations and in the process of de-registered with Malaysia government in October
2025.

On
January 7, 2020, the Company transferred its entire interest in Bright Swallow to Y-Tone (Worldwide) Limited an unrelated third party.

Nova
Furniture Macao Commercial Offshore Limited (“Nova Macao”) was organized under the laws of Macao on May 20, 2006 as a wholly
owned subsidiary of Nova Furniture. On October 14, 2020, the Macao Trade and Investment Promotion Institute approved that Nova Macao’s
offshore license became invalid under the order of Repeal of Legal Regime of the Offshore Services by Macao Special Administrative Region.
Nova Macao was de-registrated and liquidated in January 2021 and its business was taken over by Nova HK.

On
November 5, 2020, Nova LifeStyle, Inc. acquired Nova HK from unrelated third party at cost of $1,290 which was incorporated in Hong Kong
on November 6, 2019. Nova HK took over Nova Macao’s business upon its deregistration. Nova HK had minimum operations in 2021. On
February 15, 2022, the Company transferred its entire assets and business in Nova HK to Nova Malaysia. In February 2023, Nova
HK was completed the process of de-registration and liquidation. Operations of Nova HK were reported as discontinued operations in the
accompanying consolidated financial statements for all periods presented.

On September 24, 2025, the Company incorporate Xmax
Capital. On October 3, 2025, Xmax Samoa incorporated Xmax Alpha Holdings Ltd. in Cayman Islands.
On October 14, 2025, Xmax Samoa incorporated Xmax Beta Holdings Ltd. and Xmax Delta Holdings Ltd. in Cayman Islands. On October 15, 2025,
Xmax Samoa incorporated Xmax Sigma Holdings Ltd. in Cayman Islands. Xmax Samoa is a holding company with no actual business operations.
Xmax Delta Holdings Ltd. and Xmax Sigma Holdings Ltd. currently do not have any business operations. On April 1, 2026, the Company incorporated XMax AI Inc. in the State of
Nevada.

Our
organizational structure as of December 31, 2025 is set forth in the diagram:

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Our
Products

We
design and market modern residential and commercial furniture in diverse markets worldwide. Our products feature urban and
contemporary styles, combining comfort and functionality in matching furniture collections and upscale luxury pieces appealing to
lifestyle-conscious middle and upper middle-income consumers. Many of our products are segments of multi-component furniture
collections in distinctive design styles, attractively priced in the medium and upper-medium ranges. Our product lines feature
upholstered, wood and metal-based furniture pieces. We classify our products by room, designation or series, such as living room,
dining room, bedroom and home office series, and by category or product types such as sofas, chairs, dining tables, beds,
entertainment consoles, cabinets and cupboards. Our largest selling product categories for the year ended December 31, 2025 were
marbles slabs, sofas and coffee tables, which accounted for approximately 47%, 30% and 5% of sales , respectively. For the year
ended December 31, 2024, our largest selling product categories were sofas, beds and coffee table, which accounted for approximately
50%, 13% and 8% of sales, respectively. Our products are manufactured primarily from medium-density fiberboard, or MDF board,
and particleboard covered with veneers or lacquers and combined with other materials, including steel, glass, marble, leather, jade
and fabrics.

Our
product offerings consist of a mix of furnishings designed by us, and sourced from third party manufacturers that are supervised under
our rigorous quality control processes. Through market research, customer feedback, and ongoing design development, we identify the latest
trends and customer needs in target markets to develop new products, collections and brands. Our product collections are designed to
appeal to consumer preferences in specific markets. We develop both individual furniture pieces and complete furniture collections that
equip an entire home which feature matching furniture suites, providing convenient home furnishing options for lifestyle-conscious consumers.

We
introduce new collections and launch new design styles at international furniture exhibitions or trade fairs. Our products are displayed
in our showrooms. We further support our new product launches with product brochures and online marketing campaigns. Our staff collects
customer feedback and collaborates with customers worldwide to design store and showroom layouts. In marketing materials, we highlight
matching furniture collections by displaying complete and fully accessorized whole-room settings instead of individual furniture pieces.
We believe that such in-store presentations provide convenient, one-stop solutions to customers, and thus incentivize clients to purchase
an entire room of furniture from us instead of shopping for individual pieces offered by different brands or manufacturers. Our products
are mainly designed by our own designers and we also used independent designers in the past for product design. Customer orders are filled
by third party manufacturers under our direct quality control. We believe that our products feature superior materials, attractive appearances,
superb functionalities and satisfying price points generally desired by today’s middle to upper middle-income consumers worldwide.

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International
Markets

We
have been selling products to the U.S., Canada, Honduras, Jamaica, Puerto Rico, Colombia, Mexico, Cayman Islands, Saudi Arabia, Kuwait,
and Middle Eastern markets under the Diamond Sofa brand and sold our Jade Mats in Malaysia through Nova Malaysia. We believe that
discretionary purchases of furniture by middle to upper middle-income consumers will continue to increase in the furniture markets worldwide.
We also believe that furniture products that feature contemporary design styles such as ours will continue to attract significant customer
demand.

In
2025, our products were sold in 9 countries worldwide, with North America as our principal international market. Sales to North America
accounted for 52.1% and 97.4% of our total sales for 2025 and 2024, respectively. Sales to Hong Kong accounted
for 47.4% and 0% for 2025 and 2024, respectively. Sales to other regions accounted for 0.5% and 2.6%
of our total sales for 2025 and 2024, respectively. In 2023, via our subsidiary, Nova Malaysia, we marketed and sold high-end physiotherapeutic
jade mats for use in therapy clinics, hospitality, and real estate projects in Malaysia. Due to the negative impact caused by COVID-19
in 2021 and 2022, we eventually sold the entire jade mats inventory for $2.00 million in liquidation sales in June 2023 and existed from
Jade Mats business. As we continue to broaden our distribution network, increase direct sales and grow in the emerging markets, we believe
that we are well positioned to respond to changing market conditions that will allow us to take advantage of any upturns in the global
and local economies of the markets that we serve.

Our
expansion in Malaysia with health line products was disrupted due to COVID-19. Our initial plan was to establish showrooms in which
consumers can interact with our products. Through research, we found that consumers were becoming more self-aware about their health
and were willing to improve their lifestyles. Our showrooms were stocked and ready for local consumers to visit, however, due to
government regulations these operations have been suspended until quarantines and travel restrictions are lifted. In October 2021,
the Order was lifted for people who are fully vaccinated and our store has reopened since. We started the online sales of our jade
mats products in Malaysia since 2021. In April 2022, Malaysia reopened the border for foreign visitors. In June 2023, everything is
back to normal in Malaysia. Due to the negative impact caused by COVID-19 from 2020 to 2022, the Company eventually sold the entire
jade mats inventory for $2.00 million in liquidation sales in June 2023 and existed from Jade Mats business. Nova Malaysia ceased
its business operations and in the process of de-registered with Malaysia government in October 2025.

The
furniture wholesale business faces several risks that can impact its operations and profitability. Some common risks include: (i) Economic
Instability: Fluctuations in the economy, slow down in real estate market and high interest rate can affect consumer spending on furniture, leading to decreased demand for products; (ii) Competition:
Intense competition from other wholesalers, retailers, and online platforms can impact market share and pricing strategies; (iii) Supply
Chain Disruptions: Interruptions in the supply chain, such as delays in shipping or shortages of raw materials or finished products,
can hinder production and delivery schedules; (iv) Changing Consumer Preferences: Shifts in consumer preferences towards sustainable,
trendy, or customized furniture may require wholesalers to adapt their product offerings; (v) Seasonal Demand: The furniture industry
often experiences seasonal peaks and troughs, which can impact cash flow and inventory management; (vi) Tariff and Regulatory Challenges:
Increase of import tariff for furniture products and compliance with regulations related to product safety, environmental standards,
and labor practices can add complexity and costs to operations.

In
order to mitigate these risks, we will continue to diversify our product range, build strong relationships with suppliers, closely monitor
market trends and changes in tariffs and regulations, invest in technology for efficiency, and maintain a robust risk management strategy.

Our
global logistics and delivery capabilities provide our customers with the flexibility to select from our extensive furniture collections
to address their respective needs. We design and supply our products under our own brands. We also design and ship products for other
major brands as their OEM designer or supplier. We offer a wide selection of stand-alone furniture pieces across a variety of product
categories and approximately over 45 products developed exclusively for the international markets. We also sell products under the Diamond
Sofa brand to distributors and retailers in North America, South America, Asia and Middle East and to end-user U.S. consumers our own
online orders or through third-party shopping portals. Reflecting market demand, our research and development team works closely with
customers to timely modify our existing product designs. We also offer custom-designed styles for specific market segments.

Sales
and Marketing

Our
sales and marketing strategies target middle and upper middle class, urban consumers, including: (1) direct sales to the U.S. and international
customers; (2) internet sales and online marketing campaigns; and (3) participation in exhibitions and trade shows.

We
diversify our customer base by increasing direct sales to a broad range of retailers and chain stores across the U.S. and international
markets. We plan to continue to expand our direct sales and marketing efforts in North America, and in particular the U.S., which historically
is the largest market worldwide for imported furniture. We intend to expand the “Diamond Sofa” brand and introduce new brands
for direct sales in the U.S. and international markets while continuing to offer custom-made products under private label.

Diamond
Bar also currently sells products under the Diamond Sofa brand in the U.S. through third party shopping portals, shipping orders received
online directly to the end customer. We believe that our planned direct-to-consumer online sales and marketing strategies will increase
our sales in the U.S. by building our brand awareness and acting as an effective advertising vehicle. We also support new product collections
and brand launches with print and online advertising campaigns, participation in furniture exhibitions and by offering product brochures
and samples. We provide samples and brochures of new products for international markets to distributors and buyers, as is common in the
furniture industry.

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We
gain new customers by attending many international furniture trade shows throughout the years. During these events, we introduce new
product offerings and launch new design collections. We believe this marketing process helps us to develop and detect the latest-trends
in the marketplace, allowing us to better understand the challenges and opportunities facing distributors and buyers with whom we have
long–standing customer relationships. We exhibit new products under the “Diamond Sofa” brand during the Las Vegas Market
(U.S.) and the High Point Market (U.S.) trade shows. Internationally, we participate in trade fairs in collaboration with our customers.
We plan to expand our business in the Middle East by attending several furniture exhibitions in those markets, such as trade show in
Dubai. To highlight our latest design collections, we maintain year-round showrooms at the Company’s headquarters in California
as well as the High Point Market and Las Vegas Market.

In
2023, via our subsidiary Nova Malaysia, we sold our entire high-end physiotherapeutic jade mats to an unrelated party and existed the
jade mats business in Malaysia. Nova Malaysia ceased its business operations and in the process of de-registered with Malaysia government in October
2025.

Suppliers
and Manufacturers

We
source finished goods from third-party manufacturers to fulfill orders placed by customers through Diamond Bar and Nova Malaysia for
the U.S. and international markets. Two of our principal suppliers of finished goods in 2025 accounted for approximately 25% of our total
purchases from operations for 2025. By maintaining relationships with multiple suppliers, generally we benefit from a more stable supply
chain and better pricing. Under ordinary circumstances, if a change of suppliers is necessary, we believe that we can quickly fulfill
our requirements from other suppliers without interruptions in order fulfillment. We monitor our suppliers’ ability to meet our
product needs and we participate in quality assurance activities to reinforce our high-quality standards. Our third-party manufacturing
contracts are generally of annual or shorter term durations. We issue production orders to manufacturers based on individual purchase
orders. Our manufacturing relationships are non-exclusive, and we are permitted to procure products from other sources at our discretion.
None of our manufacturing contracts include production volume or purchase commitments on the part of either party. Our third-party manufacturers
are responsible for sourcing raw materials, agreeing to produce parts and finished products to our specifications. We hold our suppliers
to high quality standards and delivery deadlines. Our quality control procedures may extend to stringent requirements for raw material
suppliers.

Customers

Our
target end customer is the middle and upper middle-income consumer of residential and commercial furniture. In the U.S. and
international markets, our sales principally are to furniture distributors and retailers who in turn offer our products under their
own brands or under our Diamond Sofa brand. One customer accounted for greater than 10% of our total sales in 2025 and no customer
accounted for greater than 10% of our total sales in 2024, respectively. We will increase direct sales to retailers and chain stores
worldwide as we continue to diversify our customer base from global furniture distributors.

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We
are focusing on establishing and growing long-term relationships with our customers. We believe that the majority of our customers view
us as a strategic long-term supplier and value the quality of our products, our timely delivery and design capabilities. We generally
negotiate renewable supplier agreements with firm pricing on our products, typically for a term of one year, as is customary in the furniture
industry, with individual orders made on standard purchase orders. In 2025, our products were sold in 9 countries worldwide, with North America as our principal international market.
Sales to North America accounted for 52.1% and 97.4% of our total sales for 2025 and 2024, respectively. Sales to Hong Kong accounted
for 47.4% and 0% for 2025 and 2024, respectively. Sales to other regions accounted for 0.5% and 2.6% of our total sales for 2025 and 2024,
respectively. We expect that a majority of our revenues will continue to come
from our sales to the U.S. Diamond Bar has driven expansion of our sales to the U.S., Mexico, and South America through Diamond Bar’s
longstanding customer relationships and distribution capabilities. Diamond Bar’s revenues accounted for 52.6% and 100% of our
total sales for 2025 and 2024, respectively, and Nova Malaysia’s revenues accounted for 0.0% of our total sales for 2025
and 2024, respectively. In addition, we anticipate increasing internet sales under the Diamond Sofa brand through third-party shopping
portals. We believe that as we expand our broad network of distributors and increase direct sales,
we will be better positioned to capitalize on emerging market trends.

We
typically used to experience stronger fourth calendar quarters as our product sales are subject to the seasonality and fluctuations typical
of the furniture industry. This industry-based seasonality was generally caused by shipping lead-times to international markets combined
with the real estate market slowdown and decrease in furniture consumption commonly experienced during the summer months in the Northern
Hemisphere markets in which the majority of our customers are located and our products sell at retail. We believe that consumer demand
for furniture generally reflects sensitivity to overall economic conditions, including, but not limited to, tariffs, unemployment rates,
housing market conditions and consumer confidence.

Competition

The
furniture industry is large and highly competitive. The industry consists of many manufacturers, distributors and retailers, none of
which dominates the fragmented and diverse market. Our products principally compete in the U.S., Canada, Cayman Island, Costa Rica,
Honduras, Jamica, Kazakhstan, Mexico and Saidi Arabia. The
primary competitive factors in these markets for our products and target consumers are price, quality, style, marketing,
functionality and availability.

In
the U.S. and international markets, we compete against other furniture distributors and wholesalers which are mostly located in China
and other Southeast Asian countries. We also compete against traditional distributors in North America and Europe. We believe that we
have significant competitive advantages over North American and European distributors due to our superb customer service and a history
of prompt delivery of high-quality products. Our contemporary product designs have styles and functionality that are better than, or
at least comparable to, those offered by our higher-priced competitors. Our design team closely coordinates with our sales and marketing
staff to include customer feedback as part of their ongoing R&D improvement process, thus allows the Company to develop and timely
modify products to meet the changing stylistic and functional demands from our worldwide customers. We believe that our decades of product
experience and proven performance record offer competitive edges over many other suppliers. In addition to our design and logistical
capabilities, we believe that our experience from sourcing custom-made products for distributors presents significant benefits to our
customers.

Trade
and Tariff

Since
February 1, 2025, President Trump issued executive orders imposing additional tariff on furniture products imported from China and
India which are currently between 27% and 70%, 0% and 50%, respectively. While previous tariffs on Chinese and India goods and
modifications to trade agreements have resulted in a material impact on our business and where we purchase our finished products,
these new tariffs or any additional actions, such as “reciprocal” tariffs on U.S. trading partners to address trade
imbalances, could negatively impact our ability and the ability of our third-party vendors and suppliers to source products from
foreign jurisdictions, which could lead to an increase in the cost of goods and adversely affect the Company’s profitability.
Tariffs passed on to consumers through higher prices can also negatively impact consumer confidence and discretionary
spending.

We
continue to evaluate the impact of currently effective tariffs, including potential future retaliatory tariffs, as well as other recent
changes in foreign trade policy and the U.S. Administration on our supply chain, costs, sales and profitability, and are working through
strategies to mitigate such impact, including reviewing sourcing options and working with our vendors and merchants. At this time, it
is unknown how long U.S. tariffs on Chinese goods will remain in effect or whether additional tariffs will be imposed. Depending upon
their duration and implementation, as well as our ability to mitigate their impact, these changes in foreign trade policy and any recently
enacted, proposed and future tariffs on products imported by us from China, as well as general uncertainty in the tariff environment,
could negatively impact our business, results of operations and liquidity if they seriously disrupt the movement of products through
our supply chain or increase their cost.

Environmental
and Regulatory Matters

Our
operations are subject to various laws and regulations both domestically and abroad. In the U.S., federal, state and local regulations
impose standards on our workplace and our relationship with the environment. For example, the U.S. Environmental Protection Agency, Occupational
Safety and Health Administration and other federal agencies have the authority to promulgate regulations that may impact our operations.
In particular, we are subject to legislation placing restrictions on our generation, emission, treatment, storage and disposal of materials,
substances and wastes. Such legislation includes: the Toxic Substances Control Act; the Resource Conservation and Recovery Act; the Clean
Air Act; the Clean Water Act; the Safe Drinking Water Act; and the Comprehensive Environmental Response and the Compensation and Liability
Act (also known as Superfund). We are also subject to the requirements of the Consumer Product Safety Commission and the Federal Trade
Commission, in addition to regulations concerning employee health and safety matters. We believe the Company has complied with the relevant
federal, state, local and international requirements for environmental protection.

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Intellectual
Property

We
rely on the trademark protection laws in the U.S. to protect our intellectual property and maintain our competitive position in the
marketplace. The Company and our subsidiaries currently hold two trademarks registered in the U.S. related to the “Diamond
Sofa” brand and one trademark registered in U.S. related to the “Xmax”. In addition, we have registered and maintained numerous internet domain names related to our business, including
“novalifestyle.com”, “novaliving.com.my” and “diamondsofa.com.”

Research
and Development

We
believe that new product designs are important to our continued success. We actively seek to protect our product designs and brand names
under the trademark protection laws in the U.S., but the copying of a product’s appearance is a common and ongoing issue in the
furniture industry as manufacturers seek to capitalize on popular designs and features by copying those of their competitors and making
subtle changes to avoid infringement claims. To remain competitive, we believe that we must constantly innovate to stay ahead of competitors.
We have developed a design process that enables us to better manage the short product life cycles for furniture designs by anticipating
and responding quickly to changing consumer preferences. Ordinarily, we strive to attend furniture exhibitions worldwide, conduct market
research and solicit customer feedback to help us identify new trends and customer needs in our target markets. We then incorporate customer
feedback into new product designs. We normally introduce new product collections annually for the U.S. and international markets. We
anticipate introducing new products under the “Diamond Sofa” brand on a quarterly basis for the U.S. market. At least annually,
we assess the marketing results for new designs in order to decide whether to continue with a particular line.

We
use in-house designers and computer-aided modeling systems to generate design and related development work. We have used independent
designers in the past for product design, from which we built prototype furniture pieces for refinement and testing. During 2024,
Nova Malaysia spent $2.00 million on developing Virtual and Augmented reality software and AI system for potential consulting
business. The entire system was far from complete as it required to integrate with other components in order to be functional and it
was not in operation and was eventually abandoned due to the close down of the business of Nova Malaysia. In 2025 and 2024, we invested $0 million and $2.00 million, respectively, on
research and development expense. We may increase future investments in R&D based on our growth needs.

Furniture
Industry Regulations and Standards

We
and our products are subject to U.S. and international regulations related to the furniture industry.

Our
products are subject to the mandatory and voluntary furniture test standards of the U.S. and international markets in which our products
are distributed to end consumers, including those developed by the American National Standards Institute, or ANSI, Business and Institutional
Furniture Manufacturer’s Association, or BIFMA, ASTM International, California Air Resources Board, or CARB, Furniture Industry
Research Association, or FIRA, and the International Organization for Standardization, or ISO. These environmental, ecological and formaldehyde
emission standards and source of origin labeling requirements are national or international, with the U.S. and European Union typically
having the strictest standards for their markets. We source products from third party manufacturers and we rely on them to meet all local
manufacturing standards.

Employees

As
of December 31, 2025, we had 22 full time employees worldwide. All were in our U.S. corporate office. We believe that relations with our
employees are satisfactory. We have no collective bargaining agreements with our employees.