XMax Sales Soar, Losses Narrow Amid Strategic Investment

Ticker: XWIN · Form: 10-Q · Filed: Nov 14, 2025 · CIK: 1473334

Sentiment: mixed

Topics: Furniture Industry, Blockchain Technology, Net Loss, Revenue Growth, Equity Financing, Goodwill Impairment, Cash Flow

TL;DR

**XWIN is burning cash but showing revenue growth, making it a speculative buy for risk-tolerant investors betting on a turnaround.**

AI Summary

XMax Inc. (XWIN) reported a significant increase in net sales for the nine months ended September 30, 2025, reaching $14,953,032, a substantial rise from $7,680,733 in the prior year. Despite this revenue growth, the company recorded a net loss of $1,755,172 for the nine-month period, an improvement from the $4,492,309 net loss in the same period of 2024. Gross profit increased slightly to $3,472,084 from $3,390,382 year-over-year. Operating expenses decreased significantly by 44% to $4,351,961 from $7,783,304, primarily due to a drastic reduction in research and development expenses from $1,971,929 to $1,182. The company's cash and cash equivalents surged to $1,714,382 as of September 30, 2025, from $161,902 at December 31, 2024, largely driven by $8,632,990 in financing activities, including $8,149,990 from equity financing. A notable strategic move was a $5,000,000 investment in a fund of Preamble Capital LLC. The company also experienced a loss on impairment of goodwill of $218,606 during the nine months ended September 30, 2025.

Why It Matters

XMax's substantial revenue growth of 94.6% and narrowed net loss indicate potential operational improvements and market traction, which could be a positive signal for investors. The significant equity financing of $8.15 million suggests investor confidence or a critical need for capital, impacting share dilution but also providing liquidity. The $5 million investment in Preamble Capital LLC could signal a new strategic direction or diversification, potentially affecting future competitive positioning in the furniture and blockchain industries. Employees might see increased job security with improved financial health, while customers could benefit from continued product development, although the drastic cut in R&D raises questions about long-term innovation.

Risk Assessment

Risk Level: medium — Despite significant revenue growth, XMax Inc. continues to report a net loss of $1,755,172 for the nine months ended September 30, 2025, indicating ongoing unprofitability. The company also incurred a $218,606 loss on impairment of goodwill, suggesting past acquisitions may not be performing as expected. While cash increased, it was largely due to equity financing, which can dilute existing shareholders.

Analyst Insight

Investors should closely monitor XMax's next earnings reports for sustained profitability and positive operating cash flow, not just revenue growth. Evaluate the return on the $5,000,000 investment in Preamble Capital LLC and the impact of reduced R&D on future product innovation before considering a position.

Financial Highlights

debt To Equity
N/A
revenue
$14.95M
operating Margin
N/A
total Assets
N/A
total Debt
N/A
net Income
($1.76M)
eps
N/A
gross Margin
23.2%
cash Position
$1.71M
revenue Growth
+94.6%

Key Numbers

Key Players & Entities

FAQ

What were XMax Inc.'s net sales for the nine months ended September 30, 2025?

XMax Inc.'s net sales for the nine months ended September 30, 2025, were $14,953,032, a significant increase from $7,680,733 reported for the same period in 2024.

Did XMax Inc. achieve profitability in the nine months ended September 30, 2025?

No, XMax Inc. reported a net loss of $1,755,172 for the nine months ended September 30, 2025, although this was an improvement from the $4,492,309 net loss in the prior year's comparable period.

How much cash and cash equivalents did XMax Inc. have as of September 30, 2025?

As of September 30, 2025, XMax Inc. had cash and cash equivalents totaling $1,714,382, a substantial increase from $161,902 at December 31, 2024.

What was the primary driver of the increase in XMax Inc.'s cash and cash equivalents?

The primary driver was $8,632,990 in net cash provided by financing activities, which included $8,149,990 from equity financing during the nine months ended September 30, 2025.

What strategic investment did XMax Inc. make during the period?

XMax Inc. made a $5,000,000 investment in a fund of Preamble Capital LLC during the nine months ended September 30, 2025.

What was XMax Inc.'s loss on impairment of goodwill for the nine months ended September 30, 2025?

XMax Inc. recognized a loss on impairment of goodwill of $218,606 for the nine months ended September 30, 2025.

How did XMax Inc.'s operating expenses change year-over-year?

Total operating expenses for XMax Inc. decreased significantly by 44% to $4,351,961 for the nine months ended September 30, 2025, from $7,783,304 in the same period of 2024.

What was the impact of research and development expenses on XMax Inc.'s financials?

Research and development expenses for XMax Inc. drastically decreased to $1,182 for the nine months ended September 30, 2025, from $1,971,929 in the prior year, contributing to the overall reduction in operating expenses.

What is XMax Inc.'s business focus?

XMax Inc. is a U.S. holding company that markets, designs, and sells furniture worldwide through subsidiaries like Nova Furniture and Diamond Bar, and is also developing blockchain technology applications for the furniture industry through i Design Blockchain Technology, Inc.

What is the current number of outstanding shares for XMax Inc.?

As of November 13, 2025, XMax Inc. had 41,871,727 shares of common stock outstanding.

Risk Factors

Industry Context

XMax Inc. operates in a sector likely characterized by rapid technological advancement and significant R&D investment. The competitive landscape demands continuous innovation to maintain market share. Companies in this space often face challenges in balancing growth initiatives with profitability, leading to periods of cash burn funded by external capital.

Regulatory Implications

The company must adhere to accounting standards for goodwill impairment (ASC Topic 350) and financial reporting. Any significant changes in R&D spending or business combinations could attract scrutiny regarding their impact on future performance and asset valuations.

What Investors Should Do

  1. Monitor R&D spending and future innovation pipeline.
  2. Analyze the sustainability of the business model given operational cash burn.
  3. Evaluate the strategic rationale and performance of the Preamble Capital LLC investment.
  4. Assess the implications of goodwill impairment on future earnings.

Key Dates

Glossary

Goodwill
An intangible asset representing the excess of the purchase price of an acquired company over the fair value of its identifiable net assets. It is not amortized but tested annually for impairment. (XMax Inc. recorded a $218,606 loss on impairment of goodwill, indicating a potential overvaluation of past acquisitions or underperformance of acquired assets.)
ASC Topic 350
Accounting Standards Codification Topic 350, which governs accounting for Intangibles-Goodwill and Other, including impairment testing requirements. (This standard dictates how XMax Inc. must test and recognize any impairment losses related to its goodwill.)
Discounted Cash Flow (DCF) analysis
A valuation method used to estimate the value of an investment based on its expected future cash flows, discounted back to their present value. (This is a primary method used by management to determine the fair value of reporting units for goodwill impairment testing.)
Equity Financing
Raising capital by selling shares of ownership in the company. (XMax Inc. heavily relied on equity financing ($8,149,990) to boost its cash position, which can dilute existing shareholders.)

Year-Over-Year Comparison

XMax Inc. has demonstrated impressive revenue growth, with net sales increasing by 94.6% to $14.95M for the nine months ended September 30, 2025, compared to $7.68M in the prior year. Despite this top-line expansion, the company's net loss narrowed to $1.76M from $4.49M, indicating improved cost management, particularly a significant reduction in operating expenses. However, the company's cash position has been bolstered by substantial equity financing, and it continues to experience a net cash outflow from operations.

Filing Stats: 4,462 words · 18 min read · ~15 pages · Grade level 16.6 · Accepted 2025-11-14 16:31:36

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 1 Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024 1 Condensed Consolidated Statements of Loss and Comprehensive Loss for the nine months and three months ended September 30, 2025 and 2024 (unaudited) 3 Condensed Consolidated Statements of Stockholders' Equity for the nine months and three months ended September 30, 2025 and 2024 (unaudited) 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) 6 Notes to Condensed Consolidated Financial Statements for the nine months and three months ended September 30, 2025 and 2024 (unaudited) 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 48 Item 4.

Controls and Procedures

Controls and Procedures 48

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 49 Item 1A.

Risk Factors

Risk Factors 49 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 49 Item 5. Other Information 49 Item 6. Exhibits 49

Signatures

Signatures 50 i Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements XMAX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2025 AND DECEMBER 31, 2024 September 30, 2025 December 31, 2024 UNAUDITED AUDITED Assets Current Assets Cash and cash equivalents $ 1,714,382 $ 161,902 Accounts receivable, net 7,935,938 36,371 Advance to suppliers 183,924 4,689,148 Inventories 2,254,098 2,824,353 Financing lease right-of-use assets, current 20,363 20,363 Prepaid expenses 150,170 202,294 Other receivables 10,508 17,415 Total Current Assets 12,269,383 7,951,846 Non-current Assets Property, plant, property and equipment, net 220,388 252,186 Financing lease right of use assets, non-current 22,060 37,332 Operating lease right-of-use assets, net 721,508 1,401,801 Intangible assets, net – 3,109 Investment in fund 5,000,000 – Lease deposit 53,103 52,523 Goodwill – 218,606 Total Non-current Assets 6,017,059 1,965,557 Total Assets $ 18,286,442 $ 9,917,403 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Table of Contents XMAX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (CONT ' D) AS OF SEPTEMBER 30, 2025 AND DECEMBER 31, 2024 September 30, 2025 December 31, 2024 UNAUDITED AUDITED Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 623,602 $ 728,546 Operating lease liabilities, current 703,928 716,602 Finance lease liabilities - current 20,295 32,585 Advance from customers 349,675 413,583 Loan from shareholders 389,714 385,147 Accrued liabilities and other payables 934,335 1,683,033 Other loan 8,773 13,424 Security deposit 50,000 -- Income tax payable 1,333,149 1,852,399 Total Current Liabilities 4,413,471 5,825,319 Non-current Liabilities Other loan 204,105 197,828 Opera

Business

Business Combination For a business combination, the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree are recognized at the acquisition date and measured at their fair values as of that date. In a business combination achieved in stages, the identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, are recognized at the full amounts of their fair values. In a bargain purchase in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any noncontrolling interest in the acquiree, that excess in earnings is recognized as a gain attributable to the acquirer. Deferred tax liability and assets are recognized for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination in accordance with Accounting Standards Codification ("ASC") Topic 740-10. Goodwill Goodwill is the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with ASC Topic 350, "Intangibles-Goodwill and Other," goodwill is not amortized but is tested for impairment, annually or more frequently when circumstances indicate a possible impairment may exist. Impairment testing is performed at a reporting unit level. An impairment loss generally would be recognized when the carrying amount of the reporting unit exceeds its fair value, with the fair value of the reporting unit determined using discounted cash flow ("DCF") analysis. A number of significant assumptions and estimates are involved in the application of the DCF analysis to forecast operating cash flows, including the discount rate, the internal rate of return and projections of realizations and costs to produce. Management considers historical experience and all available informat

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