Risk Factors Investing in the Company’s American Depositary Shares (“ADSs”) involves certain risks. You should carefully consider each of the following risks and all of the information included in this Annual Report. We may not be able to continue our business as a going concern, and we may be unable to raise the additional capital necessary to fund our operations—Our consolidated financial statements for the year ended December 31, 2025 were prepared on a going concern basis, which assumes that the Group will be able to meet its obligations as they fall due within one year from the date of the approval of such consolidated financial statements. However, as discussed in Note 3(f) to the Consolidated Financial Statements and in “We have a history of operating losses and cannot assure you that we will be profitable in the future; our future profitability, financial condition and ability to maintain adequate levels of liquidity depend, to a large extent, on our ability to overcome operational challenges” and “Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position”, the Company has suffered recurring losses from operations and reported a revenue decline of 3.32% for the year ended December 31, 2025. In addition, the Company’s revenue and cash flows for the first months of 2026 have been negatively affected by a combination of unfavorable macroeconomic conditions, including prolonged geopolitical instability, a significant discontinuity in international demand for upholstered furniture—further compounded by the recent tightening of the U.S. tariff framework—elevated inflation and interest rates in prior years leading to a reduction in consumers’ disposable income, and a subdued real estate market. The impact of these factors on Group’s liquidity raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to mitigate the adverse effects of such events and conditions are described in Note 3(f) to the Consolidated Financial Statements. In particular, in May 2026 the Company’s management, following the guidelines approved in December 2025, approved an economic and financial plan covering the period up to June 2027 (the “One-Year Budget”), aimed at restoring efficiency and profitability across the Group, which envisage, among other things, a significant reduction in fixed costs, shutdown of certain underutilized facilities, closure of non-performing directly operated stores, divestiture of certain non-strategic Italian assets, and outsourcing of low value-added activities. Most notably, the implementation of the One-Year Budget requires raising resources to cover the cash requirements through a combination of i) non-strategic asset disposals and ii) a review of the Company’s capital structure and potential capital strengthening actions including a capital increase with potential access by a national government relaunch agency. In addition, on May 14, 2026 the board of directors conferred delegated authority on the Chief Executive Officer ad interim to initiate an out-of-court composition proceeding (Composizione negoziata della crisi, the "Composition") a voluntary, debtor-in-possession restructuring tool under Italian Legislative Decree No. 14 of January 12, 2019, designed to address financial distress at an early stage through consensual negotiations, with limited court involvement. The formal request to initiate the Composition will be filed in the next forthcoming days. As described in Note 3(f), certain actions under the One-Year Budget have already been undertaken. Management further notes that the Group’s cash flow forecasts covering a 12-month period from the date of approval of the consolidated financial statements for the year ended December 31, 2025 are heavily dependent, in particular, on the planned strengthening of the capital structure, including a potential capital increase with a potential access by national government relaunch agency, net of the cash proceeds generated by the disposal of non-strategic assets. There can be no assurance that the necessary financing will be available, or that it will be available on acceptable terms or within the envisaged timeframe. If we are unable to raise sufficient capital, we may be required to curtail our operations, reduce planned expenditures, or take other measures that could have a material adverse effect on our business and financial condition. As a result of this circumstance there is material uncertainty that raises substantial doubt about the Group’s ability to continue as a going concern for a reasonable period of time and, therefore, to continue realizing its assets and discharging its liabilities in the normal course of business. If we are not successful in implementing the One-Year Budget, we may not be able to continue operations as a going concern and our shareholders may lose their entire investment in us. 3 Table of Contents Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position — Our results of operations are materially affected by economic and political conditions in Italy, in the European Union and in the world, which may be influenced by several factors, most of which are beyond our control. Such factors include public health outbreaks (including the spread of any future epidemic), geopolitical instability, including trade wars, the war between Russia and Ukraine, the conflicts in the Middle East region (including the Israel-Hamas conflict and the recent military operations in Iran), the resulting disruption of transit through the Persian Gulf and the Strait of Hormuz, stock market performance, interest and exchange rates, inflation, recession and fears of recession, economic and political uncertainty, the availability of consumer credit, changes in global trade policies, tax rates, unemployment levels and other matters that influence consumer confidence. Deteriorating general economic conditions and generalized high levels of inflation may reduce consumers’ disposable incomes and, therefore, client demand, which may negatively impact our profitability and put downward pressure on our prices and volumes. Moreover, sales of home furnishing goods tend to be significantly affected during recessionary periods or times of increased interest rates, when the level of disposable income tends to be lower or when consumer confidence is low. Of particular relevance in the global macro-economic environment are the uncertainties relating to the scope and duration of the ongoing military conflicts. In particular, the conflict between Russia and Ukraine and the sanctions levied by the U.S., NATO and the European Union in connection thereto, and the conflicts in the Middle East region, are worsening global macro-economic conditions. More specifically, as a result of such geopolitical instability, the global economy has experienced high levels of inflation and may continue to experience high levels of inflation in the future, which may result in increases in the costs of raw materials and labor, and other goods or services required to operate and grow our business, and such increases may continue to impact us in the future and expose us to risks associated with significant levels of cost inflation. Moreover, the high inflation rates have resulted in, and may continue to result in, higher interest rates, as central banks adjust interest rates in an attempt to manage the inflationary environment as well as economic volatility. Although global inflation levels decreased slightly in 2024 and 2025, inflation rates remain exposed to upward risk due to general macroeconomic and geopolitical uncertainty. Interest rates increased substantially in recent years and, despite having decreased slightly in 2025, they remain relatively high, in part due to the persistent inflationary pressures associated with, among other things, geopolitical instability, including the disruption of transit in the Strait of Hormuz and the resulting volatility in energy prices. The high level of inflation and increases in interest rates in recent years have affected clients’ disposable incomes, thus causing consumers to delay or reduce investments in their existing homes and to become more price conscious, resulting in a shift in demand toward less expensive products. The combination of high interest rates and high levels of inflation has resulted in recent years in more expensive mortgages, and, therefore, in a weakening of the housing market, by reducing home improvement projects and new construction activity. These factors have affected, and may in the future affect, demand for our products, thus resulting in lower revenues and lower profitability, which adversely affected, and may in the future affect, our results of operations. Moreover, although the specific impact of the conflicts and tensions in the Middle East region, including disruptions of transit through the Persian Gulf and the Strait of Hormuz, and the potential escalation thereof, remains uncertain, such impact could include, among other things, increased volatility in financial and commodity markets, increased energy prices, increased transportation costs, a higher level of general market and macroeconomic instability, and violent protests or social unrest in areas outside the immediate conflict area. These conflicts and the potential escalation thereof, as well as any other military or geopolitical conflicts that may arise in the future, could lead to a deterioration of global macroeconomic conditions, reduced household disposable income and weakened consumer demand, which could materially adversely affect our operations, financial position, and results of operations. Uncertainties regarding current and future trade arrangements and industrial policies in various countries or regions pose an additional macroeconomic risk. In particular, since the beginning of 2025, the U.S. presidential administration has announced and, in certain cases, implemented multiple new tariff measures under various authorities. In response, certain countries have announced and, in certain cases, implemented reciprocal tariffs or other similar actions. These tariffs have been announced, modified, suspended, or reinstated with limited notice. As a result of these developments, there remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such measures, and the potential imposition of new or increased tariffs and other trade barriers or protectionist industrial policies; such uncertainty, in turn, may adversely affect global trade and macroeconomic conditions, resulting in higher costs for both producers and consumers. Governments may continue to resort to trade barriers to protect domestic industries from foreign imports, to retaliate against similar measures imposed by other countries, or to address economic challenges such as currency deflation. The imposition of tariffs, along with the uncertainty of whether, and to what extent, new tariffs (or other new related laws or regulations) will be enacted, and the impact of such actions on us, our business, financial condition and results of operations, as well as on our industry and on global consumer purchasing power, may have a negative impact on our results of operations. Adverse economic conditions may also affect the financial health and performance of our franchises and large distributors in a manner that will affect sales of our products or their ability to meet their commitments to us. In addition, if our retail customers are 4 Table of Contents unable to sell our products or are unable to access credit, they may experience financial difficulties leading to bankruptcies, liquidations, and other unfavorable events. If any of these events occur, or if unfavorable economic conditions continue to challenge the consumer environment, our future sales, results of operations and liquidity would likely be adversely impacted. Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations — Our business is significantly exposed to raw material, transportation and labor costs, which are generally dependent on a number of factors beyond our control. Specifically, prices of the raw materials we use in our production processes generally depend, among other things, on macroeconomic factors that may affect commodity prices; changes in supply and demand; energy and transportation costs; general economic conditions; inflation and interest rates; significant political events; supply costs; competition; import duties, tariffs, anti-dumping duties and other similar costs; currency exchange rates and government regulation; and events such as natural disasters and widespread outbreaks of infectious diseases. In addition, changes in global trade policies, including the imposition of new or increased tariffs, taxes, customs duties or other similar trade restrictions by the U.S. government and/or other foreign governments on certain products and materials, could potentially disrupt our existing supply chains and increase the cost of raw materials critical to the manufacture of our products and we may be unable to find a supplier in the relevant country of production that can economically provide the necessary raw materials in the quantities we require. This, in turn, would increase the overall cost of our products and reduce their demand. To manage the increased costs, we would either have to raise prices, which may result in reduced sales in the affected markets, or accept lower profit margins. Tariffs and other non-tariff trade practices and policies may adversely affect our business in other ways beyond increased costs for our products. We have taken, and may in the future take, steps to move our supply chain away from countries with higher tariff rates in favor of other jurisdictions, but these countermeasures may prove to be ineffective and the ability to predict tariff rates in different countries may be difficult as policies may change on short notice. Uncertainty about trade policy, tariff rates, and other changes in practices affecting international trade might have an adverse effect on our business and results of operation and we may face challenges in implementing the optimal responses to changing trade conditions. In 2025, approximately 49.6% of our total upholstered and home furnishings net sales came from leather-upholstered furniture sales. The consumption of cattle hides represented approximately 12% of the total cost of goods sold for the year ended on December 31, 2025. The dynamics of the raw hides market are dependent on the consumption of beef, the levels of worldwide slaughtering, worldwide weather conditions and the level of demand in a number of different sectors, including footwear, automotive, furniture and clothing. During the first part of 2025, prices for certain raw materials—including leather, wood, iron, aluminum, steel, cardboard packaging, and polyethylene—continued to decline, primarily driven by lower energy costs. This trend began to partially reverse in the latter part of the year. As a result, in 2025 our consumption of raw materials, semi-finished and finished products represented 37.2% of revenue compared to 36.0% in 2024. There can be no assurance that current prices will remain stable or that the recent upward trend will not continue in the future, including as a result of the evolving tariff landscape. In addition, we are exposed to increases in transportation costs. Although transportation costs were stable in 2025, representing 7.7% of revenue compared to 7.8% in 2024, there can be no assurance that such costs will not increase in the future due to, among other things, high levels of inflation, surge in demand for transportation, or other specific circumstances, such as current geopolitical tensions, especially conflicts in the Middle East region, and the resulting disruption of transit through the Persian Gulf and the Strait of Hormuz, which could cause the rerouting of shipping, as was the case in the last part of 2023 and during 2024 due to the attacks by Houthi militants from Yemen on commercial shipping in the Gulf of Aden and Red Sea, which have caused the rerouting of shipping away from the Suez Canal. The re-routing of vessels could significantly increase traffic in bunkering ports on the alternative routes and cause bunker fuel demand on such routes to rise sharply. Shipping companies could repass the costs of re-routing vessels to their customers, including us, which could significantly increase our freight costs for the shipping of products. There can be no assurance that we will be able to successfully pass along additional cost increases as they arise, and rising inflation could have an adverse impact on consumer demand for discretionary items such as home furnishings. Production delays due to disruptions in transportation and upward trends in raw material prices could result in lower sales or margins, thereby affecting our earnings. Moreover, our production process is labor-intensive and, therefore, we are exposed to increases in labor costs. In 2025, we experienced an increase in labor-related costs per employee compared to 2024 and 2023, due to renegotiation of national collective bargaining agreements in certain countries, especially in Romania (where the base salary for our employees increased on an annual basis by 9% in 2025 after increasing by 18% in 2024), Italy (where the base salary for our employees increased on an annual basis by 2.9% in 2025 after increasing by 5.9% in 2024), and Brazil (where the base salary for our employees increased on an annual basis by 5.9% in 2025 after increasing by 5.5% in 2024). The profitability of our business depends in part upon the margin between the cost to us of certain raw materials, our production costs associated with converting such raw materials into assembled products (including labor-related costs) and our costs associated with transporting our products to consumers, as compared to the selling price of our products. Although we could offset part of our 5 Table of Contents increased costs with increased pricing for our products, any unrecovered increased operating costs could adversely impact our margins and, therefore, have a material adverse effect on our results of operations. Moreover, an increase in our product prices could negatively affect our business by making consumers more price conscious, thus resulting in a shift in demand to less expensive products. We have a history of operating losses and cannot assure you that we will be profitable in the future; our future profitability, financial condition and ability to maintain adequate levels of liquidity depend, to a large extent, on our ability to overcome operational challenges — We have a history of operating losses having recorded an operating loss of €10.6 million in 2020, €22.5 million in 2019, €25.5 million in 2018 and €24.0 million in 2017. Although we achieved an operating profit of €4.9 million and €8.5 million in 2021 and 2022, respectively, we recorded an operating loss of €9.5 million in 2023, an operating loss of €6.3 million in 2024, and an operating loss of €18.8 million in 2025, and we may not be able to achieve or sustain profitable operations in the future or generate positive cash flows from operations. Furthermore, during the last fourteen years, we have incurred aggregate financial obligations in the amount of €64.2 million (€0.7 million, €9.6 million, €3.1 million, €0.1 million, €0.3 million, €3.8 million, €3.8 million, €1.4 million, €16.9 million, €4.5 million, €4.5 million, €13.5 million, €1.4 million and €0.6 million for the years 2025, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013 and 2012 respectively), almost entirely in connection with our efforts to reduce redundant workers. See “We have redundant workers at our Italian operations, which remains an unresolved issue, and have benefited in 2025 and in previous years from temporary work force reduction programs; if we continue to be unable to reduce our redundant workers and/or if such temporary work force reduction programs are not continued, our business, results of operations and liquidity may continue to be impacted or may be impacted at a greater extent.” Our results of operations and ability to maintain adequate levels of liquidity in the future will depend on our ability to overcome these and other challenges. Our failure to achieve profitability in the future could adversely affect the trading price of our ADSs and our ability to raise additional capital and, accordingly, our ability to grow our business. There can be no assurance that we will succeed in addressing any or all of these risks, and the failure to do so could have a material adverse effect on our business, results of operations and financial condition. We have redundant workers at our Italian operations, which remains an unresolved issue, and have benefited in 2025 and in previous years from temporary work force reduction programs; if we continue to be unable to reduce our redundant workers and/or if such temporary work force reduction programs are not continued, our business, results of operations and liquidity may continue to be impacted or may be impacted at a greater extent — Our Italian operations employ redundant workers. In line with the previous years, the Company has entered into a series of agreements with Italian trade unions pursuant to which government funds have been used to pay a substantial portion of the salaries of such redundant workers, who are subject to either temporary layoffs, as in the case of the Cassa Integrazione Guadagni Straordinaria (“CIGS”), or reduced work schedules, as in the case of the Solidarity Facilities (as defined below). The use of such temporary work force reduction programs has also resulted in a series of lawsuits brought against the Company. In May 2017, the Italian Supreme Court (Corte di Cassazione) rejected the Company’s appeal of a lawsuit brought by two former employees of the Company relating to the implementation of the CIGS, ruling in favor of the plaintiffs. As a result of this decision, several further workers have brought lawsuits against the Company over time for alleged misapplication of the CIGS. Since then, the Company has accordingly increased its provision for legal claims. As of December 31, 2025, provision for legal claims amounted to €2.9 million, of which €1.4 million referred to the probable contingent liability related to the legal proceedings initiated for the alleged misapplication of the CIGS. For additional information, see Note 26 to the Consolidated Financial Statements. In addition, in October 2016, the Company laid off 176 Italian workers as part of an organizational restructuring, 166 of whom were then re-employed as the Bari Labor Court deemed the dismissals to have been carried out improperly. In March 2017, the Company and the Italian institutions representing those workers agreed to extend the scope of an agreement signed by the Company and the Minister of Labor and Social Politics in 2015 to reduce working hours per day (the “2015 Solidarity Facility”) in order to lessen the impact of re-employments in 2018. Pursuant to the 2015 Solidarity Facility, a higher number of workers, as compared to the Company’s need, may continue to work at the Company, though with a salary reduction that is less than proportional to the reduction in working hours as a result of government financial support. In December 2018 and 2019, the Company and the relevant trade unions and Italian authorities agreed to extend the scope of the 2015 Solidarity Facility, which was later suspended following the COVID-19 outbreak. Indeed, from March 2020 to June 2021, in agreement with trade unions, the Company adopted certain social safety nets made available by the Italian Government to mitigate the impacts of the COVID-19 pandemic on the cost of labor. As a result, the scope of the 2015 Solidarity Facility was extended until November 2021. Since November 2021, the scope of the 2015 Solidarity Facility has been further extended over the years, most recently on January 14, 2025, until October 31, 2025.In addition, on June 19, 2025, the Company, the relevant trade unions and Italian authorities entered into a further agreement to reduce working hours per day and to provide access to the CIGS for workers 6 Table of Contents employed at plants not covered by any similar measures, for the period from July 1, 2025 to April 30, 2026 (the “2025 Solidarity Facility” and, together with the 2015 Solidarity Facility, the “Solidarity Facilities”). However, on November 5, 2025, following the Company’s formal recognition as an “Enterprise of Strategic Relevance for the Country”—which entitles the Company to access certain measures provided by applicable national legislation to further mitigate labor costs—the Company, the relevant trade unions and Italian authorities entered into a new agreement (the “2025 CIGS Agreement”) enabling the Company to benefit from CIGS for up to 805 workers for the period from November 1, 2025 to December 31, 2025, and providing for the early termination of the 2025 Solidarity Facility. On January 27, 2026, the 2025 CIGS Agreement has been further extended, allowing the Company to benefit from CIGS for up to 794 workers until December 31, 2026. Additionally, starting from December 2018, the Company and the relevant trade unions and Italian authorities agreed on the use by the Company of CIGS in order to support the Company’s reorganization process. From January 1, 2019 until March 2020, the Company benefitted from CIGS for up to 487 workers employed at the plant located in Altamura. From March 2020 to June 2021, in agreement with trade unions, the Company adopted certain social safety nets made available by the Italian Government to mitigate the impacts of the COVID-19 pandemic. As a result, CIGS was extended until February 2022. In February 2022, the Company and the relevant trade unions and Italian authorities signed an agreement allowing the Company to benefit from CIGS for up to 463 workers employed at the plant located in Altamura until mid-February 2023. In January 2023, the Company and the relevant trade unions and Italian authorities signed an agreement allowing the Company to benefit from CIGS for up to 449 workers employed at the plant located in Altamura until December 31, 2023. Furthermore, on July 11, 2023, the Company, the relevant trade unions and Italian authorities signed an agreement (the “Early Retirement Agreement”) that provides for (i) early retirement for employees who are within 60 months of reaching retirement age, (ii) the hiring of new employees, (iii) the implementation of training programs and (iv) access to the CIGS for redundant employees. As a result, among other things, the Company was allowed to benefit from CIGS for up to 875 workers employed at various plants of the Group until June 30, 2025 under the Early Retirement Agreement. If these temporary work force reduction programs are not continued in the future, our business, results of operations and liquidity may be significantly impacted. Furthermore, since 2021, we and the other parties involved have agreed to set up an incentive plan for workers who voluntarily terminate their employment relationship, that is expected to remain in place through 2026. If this or other efforts to reduce redundant workers are not successful, the labor cost associated with such redundant workers will continue to have an adverse effect on our business, results of operations and financial condition. In recent months, the Company has been engaged in active negotiations with the relevant Italian authorities, including trade unions and the competent Italian Ministry, to address labor-related challenges (including by obtaining government support measures for a workforce restructuring process) and support the Company’s long-term sustainability. The Company’s primary objective is to reach an agreement with the Italian authorities in the near term, as such an agreement could facilitate a more orderly workforce restructuring process and mitigate the associated social impact. However, as of the date of this Annual Report, the outcome of these negotiations remains uncertain, as are the potential economic and financial impacts thereof. Our ability to generate sufficient cash flows from operations to service our existing and anticipated debt obligations and to maintain adequate levels of liquidity depends on numerous factors, many of which are beyond our control— Our ability to make scheduled payments due on our existing and anticipated debt obligations and on our other financial obligations, and to refinance and to fund planned capital expenditure and development efforts will depend on our ability to generate cash. See “We have a history of operating losses and cannot assure you that we will be profitable in the future; our future profitability, financial condition and ability to maintain adequate levels of liquidity depend, to a large extent, on our ability to overcome operational challenges”. Our ability to obtain cash to service our existing and projected debts is subject to a range of economic, financial, competitive, legislative, regulatory, business and other factors (including recent heightened volatility and uncertainty), many of which are beyond our control. We may not be able to generate sufficient cash flow from our operations to satisfy our existing and projected debt and other financial obligations, in which case, we may have to undertake alternative financing plans, sell assets, reduce or delay capital investments, or seek to raise additional capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the financial markets and our financial condition at such time. To the extent we have borrowings under bank overdrafts and short-term borrowings that are payable upon demand or which have short maturities, we may be required to repay or refinance such amounts on short notice, which may be difficult to do on acceptable financial terms or at all. Our ability to generate sufficient cash flows from operations and to maintain adequate levels of liquidity is currently exposed to an environment characterized by heightened volatility and uncertainty. The geopolitical tensions caused by the ongoing conflicts in Ukraine and in the Middle East region, including the Israel-Hamas conflict, the recent military operations in Iran and the resulting disruption of transit through the Persian Gulf and the Strait of Hormuz, as well as any further escalation thereof, the imposition of sanctions, taxes and/or tariffs against Russia and Russia’s response to such sanctions, the imposition of new or increased tariffs and other trade barriers by the U.S. or other foreign governments, the risk of increased energy and raw material prices, the risk of rising inflation on a global basis and the resulting potential increases in interest rates by major central banks in major economies to curb 7 Table of Contents inflation, and the resulting impacts on financial markets, have contributed, and may continue to contribute, to instability in global financial markets, disruptions in supply chains, increased costs, reduced consumer confidence and weaker demand in certain markets in which we operate. These factors have also resulted, and may result in the future, in diminished liquidity and credit availability, which could impair our ability to access capital if needed. In response to the significant threat posed by these factors to the liquidity of financial markets and the high level of inflation — which has resulted in reduced consumer purchasing power and weakened consumer confidence — most central banks around the world have taken significant actions in recent years to return inflation levels to their respective expected targets. There can be no assurance that these interventions will be successfully transmitted into the real economy or that the financial markets will not experience significant contractions in available liquidity. In addition, persistent inflationary pressures, together with volatility in foreign exchange markets and fluctuations in energy, oil and raw material prices, could adversely affect our cost structure, margins and operating cash flows. Given our international operations and exposure to multiple currencies, unfavorable movements in foreign exchange rates may also negatively impact our revenues, costs, debt servicing capacity and the translation of our financial results, notwithstanding any hedging or other mitigating actions we may undertake. Furthermore, a tightening of credit conditions, reduced liquidity in financial markets and volatility in financing costs may limit our ability to refinance existing indebtedness or obtain additional financing on acceptable terms, or at all. Any deterioration in our financial condition or in global or regional financial market conditions could materially constrain our access to liquidity. At December 31, 2025, we had €22.2 million of bank overdrafts and short-term borrowings outstanding and €20.3 million of cash and cash equivalents. In response to these challenges, we have undertaken, and may continue to evaluate reorganization initiatives aimed at improving efficiency, optimizing our industrial and commercial footprint and strengthening cash generation; however, such initiatives are subject to execution risks, market conditions and other uncertainties, and there can be no assurance that they will achieve the intended results within the expected timeframe or at all. We cannot assure you that any refinancing or reorganization would be possible, that any assets could be sold, or, if sold, of the timing of the sales or the amount of proceeds that would be realized from those sales. We cannot assure you that additional financing could be obtained on acceptable terms, if at all, or would be permitted under the terms of our various debt instruments then in effect. Our failure to generate sufficient cash flow to satisfy our existing and projected debt obligations, or to refinance our obligations on commercially reasonable terms, would have an adverse effect on our business, results of operations and financial condition. The Company uses a securitization program as part of its liquidity management strategy; any reduction in availability, increased restrictions or termination of such program could adversely affect the Company’s liquidity—The Company operates a trade receivable securitization program as part of its liquidity management strategy. On July 9, 2015, the Company entered into an accounts receivable securitization program with an affiliate of Intesa Sanpaolo S.p.A. (the “Assignee”), which was subsequently amended and renewed on July 22, 2020 for a five-year period (the “Securitization Program”). The Securitization Program has been further amended on July 25, 2025 and January 14, 2026 (collectively, the “Securitization Program Amendments”). Following the Securitization Program Amendments, the maximum aggregate amount of receivables that may be transferred under the Securitization Program has been reduced to €18.0 million from €40.0 million, reflecting decreasing revenue levels and the Company’s downgraded creditworthiness as assessed by the Assignee. In addition, the revolving period has been extended for a one-year period and is currently scheduled to expire, absent early termination, no later than June 2027. Under the Securitization Program, the Company may assign eligible trade receivables on a revolving basis, retaining substantially all risks and rewards associated with such receivables on a pro-solvendo basis. The effective availability of funding under the Securitization Program is subject not only to the reduced portfolio cap, but also to revised and more restrictive eligibility criteria and concentration limits introduced by the recent amendments, including, among other things, stricter requirements relating to the credit quality of eligible debtors, insurance coverage, individual debtor exposure limits, geographic and jurisdictional constraints, ageing thresholds, and the exclusion of receivables overdue beyond specified time limits. As a result, the volume of receivables that can be transferred at any given time may be materially lower than the contractual maximum amount, depending on the composition and quality of the Company’s accounts receivable portfolio. Any deterioration in customer creditworthiness, changes in insurance coverage, increased payment delays, disputes, concentration breaches or failure to meet updated eligibility requirements could further limit or suspend the Company’s ability to utilize the Securitization Program. If the Securitization Program were terminated, not renewed beyond the current revolving period, or otherwise became unavailable or significantly restricted, the Company would lose an important source of short-term liquidity. In such circumstances, the Company may be required to rely more heavily on alternative financing sources or internal cash generation, which may not be available on acceptable terms, or at all. Any of these events could have a material adverse effect on the Company’s liquidity, financial condition and results of operations. Our operations may be adversely impacted by strikes, slowdowns and other labor relations matters — Many of our employees, including many of the workers at our Italian plants, are unionized and covered by collective bargaining agreements. As a result, we 8 Table of Contents are subject to the risk of strikes, work stoppages or slowdowns and other labor relations matters, particularly in our Italian plants. Any strikes, threats of strikes, slowdowns or other resistance in connection with our reorganization plan, the negotiation of new labor agreements or otherwise could adversely affect our business and impair our ability to implement further measures to reduce structural costs and improve production efficiencies. A lengthy strike that involves a significant portion of our manufacturing facilities could have an adverse effect on our cash flows, results of operations and financial condition. Additionally, we renegotiate these collective bargaining agreements at routine intervals and may be unable to renew these collective bargaining agreements on the same or similar terms, or at all. We may not execute our budget plan, successfully or in a timely manner, which could have a material adverse effect on our results of operations or on our ability to achieve the objectives set forth in our plans — The Company’s board of directors approved the One-Year Budget, aimed at restoring efficiency across the Group. The one-year budget envisages: •a significant reduction in fixed costs, including enhanced access to government-funded wage support schemes for temporary layoff workers and employees (CIGS - Cassa Integrazione Guadagni Straordinaria); •a more flexible production capacity, including shutdown of certain underutilized facilities and the outsourcing of low-value added activities, which do not require any kind of negotiation with trade unions and competent Italian Ministry; •the closure of non-performing directly operated stores ("DOS") to improve the quality of the retail network, in particular in North America; •the reinforcement of ongoing initiative finalized to a strong focus on liquidity preservation, through tight control of working capital, disciplined spending, and close monitoring of cash flows, and •expected cash proceeds from dividend distribution by the joint venture, Natuzzi Trading Shanghai, in China. Most notably, the One-Year Budget envisages raising resources to cover the cash requirements through a combination of (i) non-strategic asset disposals and (ii) a review of the Company’s capital structure and potential capital strengthening actions, including a capital increase with potential access by national government relaunch agency. The gradual improvement in the Group's profitability depends on the successful and timely execution of the Company's One-Year Budget. Failure to successfully and timely achieve the objectives included in the One-Year Budget could result in a failure to reduce costs, which could negatively affect the marginality of the Group. Failure to offer a wide range of products that appeal to consumers in the markets we target and at different price-points could result in a decrease in our future profitability — Our sales depend on our ability to anticipate and reflect consumer tastes and trends in the products we sell in various markets around the world, as well as our ability to offer our products at various price points that reflect the spending levels of our target consumers. While we have broadened the offering of our products in terms of styles and price points over the past several years in order to attract a wider base of consumers, our results of operations are highly dependent on our continued ability to properly anticipate and predict these trends. Our potential inability to anticipate consumer tastes and preferences in the various markets in which we operate, and to offer these products at prices that are competitive to consumers, may negatively affect our ability to generate future earnings. In addition, with a significant portion of our revenue deriving from the sale of leather-upholstered furniture, consumers have the choice of purchasing upholstered furniture in a wide variety of styles and materials, and consumer preferences may change. There can be no assurance that the current market for leather-upholstered furniture will grow consistently with our internal projections or that it will not decline. Demand for furniture is cyclical and may fall in the future — Historically, the furniture industry has been cyclical, fluctuating with economic cycles, and sensitive to general economic conditions, housing starts, interest rate levels, credit availability and other factors that affect consumer spending habits. Due to the discretionary nature of most furniture purchases and the fact that they often represent a significant expenditure to the average consumer, such purchases may be deferred during times of economic uncertainty. Should current economic conditions worsen (including as a result of current geopolitical tensions or of new or increased tariffs or other trade restrictions), the current rate of housing continue to decline, inflation rates resume an upward trend, or new or increased tariffs or other trade restrictions be implemented by the United States or other countries, consumers’ disposable incomes could be affected, thus deteriorating consumer demand, as well as consumer confidence, for home furnishings, which may have an adverse effect on our business, results of operations and financial condition. See “Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position.” 9 Table of Contents Our inability to accurately forecast demand for our products could affect our profitability — The delivery lead time for certain raw materials that we use in our manufacturing process, such as leather, is lengthy and, therefore, we purchase these raw materials well in advance of their consumption. This requires us to make forecasts and assumptions regarding current and future demand for our products. Inaccuracies in these forecasts and assumptions may hinder our ability to efficiently manage our operations, facilities, and production capacity, thereby adversely affecting our results of operations. Our forecasts concerning product demand influence inventory management. Over-purchasing certain raw materials may impair the value of our inventory, thus reducing our margins and negatively affecting our financial condition and liquidity. Conversely, under-purchasing certain raw materials may result in an inability to timely meet customer orders, which could also adversely affect our sales, earnings, financial condition, and liquidity. The furniture market is highly competitive — We operate in a highly competitive industry that includes a large number of manufacturers. No single company has a dominant position in the industry. Competition is generally based on product quality, brand name recognition, price and service. We mainly compete in the upholstered furniture sub-segment of the furniture market. In Europe, the upholstered furniture market is highly fragmented. In the U.S., the upholstered furniture market includes a number of relatively large companies, some of which are larger and have greater financial, technical, marketing and other resources than us. Some of our competitors offer extensively advertised, well-recognized branded products. Competition has increased significantly in recent years as foreign producers from countries with lower manufacturing costs have begun to play an important role in the upholstered furniture market. Such manufacturers are often able to offer their products at lower prices, which increases price competition in the industry. In particular, manufacturers in Asia and Eastern Europe have increased competition in the lower-priced segment of the market. In November 2021, we launched our e-commerce service for online sales which is currently active in the U.S. only. Therefore, we compete with other retailers offering consumers the ability to purchase home furnishings via the internet for home delivery and expect such competition to increase in the future. As a result of the actions and strength of our competitors and the inherent fragmentation in some markets in which we compete, we are continually subject to the risk of losing market share, which may lower our sales and profits. Market competition may also force us to reduce prices and margins, thereby negatively affecting our cash flows, or prevent us from raising the prices of our products in response to current inflationary pressures or increasing costs, which could result in a decrease in our profit margins. Although price is a significant basis of competition in our industry, we also compete on the basis of on-time delivery and our reputation for quality and customer service. If we fail to maintain our current standards for product quality, the scope of our distribution capabilities or our customer relationships, our reputation, financial condition, results of operations and cash flows could be adversely affected. Additionally, the imposition of new or increased tariffs or other trade restrictions could also trigger retaliatory responses from other countries which may decrease the competitiveness of our products in foreign markets. Fluctuations in currency exchange rates and interest rates may adversely affect our results of operations — We conduct a substantial part of our business outside of the Euro-zone and are exposed to market risks stemming from fluctuations in currency and interest rates. In particular, an increase in the value of the Euro relative to other currencies used in the countries in which we operate has in the past, and may in the future, reduce the relative value of the revenues from our operations in those countries, and therefore may adversely affect our operating results or financial position, which are reported in Euro. Additionally, we are subject to currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn revenues. In 2025, in the ordinary course of business, about 60% of the operating payments we received and about 38% of the operating payments we made were denominated in currencies other than the Euro. We also hold a substantial portion of our cash and cash equivalents in currencies other than the Euro. Therefore, we are exposed to the risk that fluctuations in currency exchange rates may adversely affect our results, as has been the case in recent years. In addition, foreign exchange movements might also negatively affect the relative purchasing power of our clients, which could also have an adverse effect on our results of operations. Although we seek to manage our foreign currency risk in order to minimize negative effects from rate fluctuations, including through hedging activities, there can be no assurance that we will be able to do so successfully. Therefore, our business, results of operations and financial condition could be adversely affected by fluctuations in market rates, particularly during times of high volatility, such as those currently experienced due to the adverse effects on financial markets of inflation pressure, the ongoing conflicts in Ukraine and in the Middle East region, including the Israel-Hamas conflict and the recent military operations in Iran, as well as new or increased tariffs imposed by the U.S. presidential administration or other countries. In the normal course of business, we also face risks that are either non-financial or non-quantifiable. Such risks principally include country risk, credit risk and legal risk. For more information about currency and interest rates risks, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” We face risks associated with our international operations — We are exposed to risks arising from our international operations, including changes in governmental regulations, tariffs or taxes and other trade barriers (as has been the case with import duties imposed by the U.S. and Canadian administrations on home furnishings imported from certain Asian countries and with the tariffs 10 Table of Contents and other trade restrictions imposed by the U.S. presidential administration, or any new or increased tariffs that the U.S. presidential administration may impose in the future, on goods imported from foreign countries); price, wage and currency exchange controls; political, social, and economic instability in the countries in which we operate (including as a result of the ongoing conflicts in Ukraine and in the Middle East region); natural disasters, such as a fire, an earthquake or a flood; outbreaks or public health crises, such as the spread of any future epidemic; inflation, exchange rate and interest rate fluctuations; extended lead time in ordering and disruptions in the supply chain due to, among other things, shortages of raw materials or the closure of certain routes (see “Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations”). Any of these factors could have a material adverse effect on our results of operations. Compliance with laws may be costly, and changes in laws could make conducting our business more expensive or otherwise change the way we do business — We are subject to numerous laws and regulations, including tax, labor and employment, customs, truth-in advertising, consumer protection, e-commerce, privacy and cybersecurity, health and safety, real estate, zoning, occupancy, and environmental, social and governance laws, intellectual property, and other laws and regulations that regulate the operations in our stores, plants and suppliers or otherwise govern our business. In addition, to the extent we expand our operations as a result of engaging in new business initiatives or product lines or expanding into new international markets, we become subject to further regulations and regulatory regimes. We may need to continually reassess our compliance procedures, personnel levels and regulatory framework in order to keep pace with the numerous business initiatives that we are pursuing, and there can be no assurance that we will be successful in doing so. If the regulations applicable to our business operations were to change or were violated by us or our vendors or buying agents, the costs of certain goods could increase, or we could experience delays in shipments of our goods, be subject to fines or penalties, or suffer reputational harm, which could reduce demand for our products and harm our business and results of operations. Our past results and operations have significantly benefited from government incentive programs, which may not be available in the future — We receive, and received, benefits from certain governments in the form of grants, incentives and tax credits. In the past, we used to benefit from Italian Government’s investment incentive programs for under-industrialized regions in Southern Italy, including tax benefits, subsidized loans and capital grants. See “Item 4. Information on the Company-Incentive Programs and Tax Benefits.” In recent years, the Italian Parliament has replaced these incentive programs with an investment incentive program to promote industrialization in the southern regions of Italy, which we are currently benefitting from, that includes grants, research and development benefits. Moreover, we have manufacturing operations in China, Brazil, Romania and Vietnam, and in some cases we were granted tax benefits and export incentives by the relevant governmental authorities in those countries. There can be no assurance that we will benefit from such grants, benefits, tax credits or export incentives in connection with our current or future investments or relevant governmental authorities will continue to provide such incentives, grants and benefits on similar terms or at all. Expectations relating to environmental, social and governance factors may impose additional costs and expose us to new risks — The focus from certain investors, customers and other key stakeholders relating to environmental, social and governance (“ESG”) matters, including environmental stewardship, social responsibility, diversity and inclusion, racial justice and workplace conduct, has increased in recent years and may lead to new and more restrictive environmental laws and regulations in certain jurisdictions. Most recently, sentiment critical of certain ESG practices has gained momentum in certain jurisdictions, and certain investors, stakeholders and regulators may express or pursue opposing views, legislation and investment expectations with respect to ESG initiatives. As a result, if our corporate responsibility procedures or standards do not meet evolving stakeholder expectations and/or if we fail to adapt to and comply with new laws and regulations or changes to legal or regulatory requirements concerning ESG matters, our brand, reputation, share price, access to and cost of capital and ability to attract and retain employees may be negatively impacted. Additionally, we may be required to make substantial investments in matters related to ESG which could affect our results of operations. Furthermore, in the event that we communicate certain initiatives and goals regarding ESG matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals. Any such adverse perceptions of our Company could negatively affect our reputation and, in turn, our business or results of operations. Climate change, or legal, regulatory or market measures to address climate change, may materially adversely affect our financial condition and business operations — Our manufacturing facilities are located in Italy, Romania, China, and Brazil and are engaged in manufacturing processes that, by using energy, produce greenhouse gas emissions (“GHGs”), including carbon dioxide. Some of such jurisdictions are considering implementing, or have already implemented, legislation on climate change and schemes addressing the regulation of carbon emissions. Such regulations on climate change may not be consistent across these countries. As a result, adaptation to such provisions may cause compliance burdens and costs to meet the regulatory obligations and economic and regulatory uncertainty. Any laws or regulations that are adopted to reduce emissions of GHGs could (i) increase our 11 Table of Contents costs for raw materials, (ii) increase our costs to operate and maintain our facilities, (iii) increase costs to administer and manage emissions programs, and (iv) have an adverse effect on demand for our products. Climate change resulting from increased concentrations of GHGs and carbon dioxide could present risks to our future operations from natural disasters and extreme weather conditions, such as hurricanes, tornadoes, wildfires or flooding. Such extreme weather conditions and events could pose physical risks to our facilities and disrupt operations of our supply chain and may increase operational costs. In particular, our timber inventory could be affected by such weather conditions with the risk of changes in timber growth cycles, fire damage, insect infestation, disease, prolonged drought and natural disasters, causing a reduction in our timber inventory and adversely affecting our raw material sourcing. Climate change may also subject our business to significant increases or volatility in the prices of certain commodities, including but not limited to electronic componentry, fuel, oil, natural gas, rubber, cotton, plastic resin, steel and chemical ingredients used to produce foam. Furthermore, any adverse contractual disputes arising from climate change-related disruptions, could result in increased litigation, costs and could also have a negative impact on our business and reputation. In July 2024, the European Union adopted the Ecodesign for Sustainable Products Regulation (ESPR) to ensure that products sold in the EU meet new sustainability standards. While Natuzzi already strives to design products that are durable, recyclable and energy efficient, this regulation will introduce additional requirements, including the implementation of enhanced transparency measures (e.g., a digital product passport). The evolving regulatory landscape (e.g., the expanded EU regulatory framework for chemicals as part of the zero-pollution goal under the European Green Deal) could restrict or ban the use of materials critical to our production and significantly impact material choices in our business, requiring substantial R&D efforts and potentially leading to increased costs and adjustments to our supply chain. In addition, the increasing fragmentation of requirements, both globally and in specific markets (e.g., individual states in the United States), could further complicate operational efficiency. Failure to protect our intellectual property rights could adversely affect us — We believe that our intellectual property rights are important to our success and market position. We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements, third-party nondisclosure and assignment agreements, and confidentiality and restricted use agreements. We believe that our patents, trademarks and other intellectual property rights are adequately supported by applications for registrations, existing registrations and other legal protections in our principal markets. However, we cannot exclude the possibility that our intellectual property rights may be challenged by others, that agreements designed to protect our intellectual property may be breached, that we may not have adequate remedies for any such breach, or that we may be unable to register our patents, trademarks or otherwise adequately protect them in some jurisdictions. Any significant impairment of our intellectual property rights, including as a result of changes in U.S. or foreign intellectual property laws, the absence of effective legal protections or enforcement measures, or our failure to obtain licenses of intellectual property from third parties, could harm our business, financial condition and results of operations or our ability to compete. Moreover, we cannot provide assurance that the use of our technology or proprietary know‐how or information does not infringe the intellectual property rights of others. If we have to litigate to protect or defend any of our rights, such litigation could result in significant costs. In addition, the adoption of artificial intelligence tools may further exacerbate these risks. We rely on information technology to operate our business, and any disruption to our technology infrastructure could harm our operations — We operate many aspects of our business including financial reporting and customer relationship management through server and web-based technologies. We store various types of data on such servers or with third parties who in turn store it on servers and in the “cloud.” Any disruption to the internet or to our global technology infrastructure or to that of our service providers, including malware, insecure coding, “acts of God”, attempts to penetrate networks, data theft or loss and human error, could have adverse effects on our operations. A cyber-attack to our systems or networks that impairs our information technology systems could disrupt our business operations and result in loss of service to customers. Our ability to keep our business operating effectively depends on the functional and efficient operation of our information, data processing and telecommunications systems, including our design, procurement, manufacturing, inventory, sales and payment process. Due to the geopolitical uncertainty arising from the ongoing conflicts in Ukraine and in the Middle East region, there is a possibility that an escalation of tensions could result in cyber-attacks that could either directly or indirectly affect our operations. Additionally, the methods used to obtain unauthorized access to systems and networks are becoming increasingly sophisticated and rapidly evolving (particularly with the growing use of artificial intelligence technologies), which may limit our ability to anticipate, detect, or prevent all such attacks before they occur. Although we experience cybersecurity incidents from time to time, we have not identified any risks from cybersecurity threats that have had, or are reasonably likely to have, a material impact on our operations, business, customer relationships or reputation. While we have invested and continue to invest in information technology risk management, cybersecurity and disaster recovery plans (see “Item 16K. Cybersecurity”), these measures cannot fully insulate us from technology disruptions or data theft or loss and the resulting adverse effects on our operations and financial results. 12 Table of Contents In response to shifts in employee workplace preferences, we have allowed certain of our employees the option of a hybrid work schedule where they may choose to work partially from home. Although we continue to implement strong physical and cybersecurity measures to ensure that our business operations remain functional and to ensure uninterrupted service to our customers, because of our remote work arrangements, our systems and our operations remain vulnerable to cybersecurity incidents, including breaches of information systems security, which could damage our reputation and commercial relationships, disrupt operations, increase costs and/or decrease net revenues, and expose us to claims from customers, suppliers, financial institutions, regulators, payment card associations, employees and others, any of which could have a material adverse effect on our results of operations and financial conditions. Furthermore, the risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased, including as a result of the Russia-Ukraine conflict and conflicts in the Middle East region. In addition, we are subject to data privacy and other similar laws in various jurisdictions, which require, among other things, that we undertake costly notification procedures in the event we are the target of a cybersecurity attack resulting in unauthorized disclosure of our customer data. If we fail to implement appropriate safeguards or to detect and provide prompt notice of unauthorized access as required by some of these laws, we could be subject to potential claims for damages and other remedies, which could have a material adverse effect on our results of operations. In 2025, we continued our strategy of migrating our business applications to the cloud, and this process will continue throughout 2026. Although these cloud migrations have increased, and will continue to increase, efficiency and functionality, such migrations make the Company more reliant on third party service providers. Any material disruption or slowdown of the Company’s information systems could result in the loss of critical data, the inability to process and properly record transactions and the material impairment of the Company’s ability to conduct business, leading to cancelled orders and lost sales. We are dependent on qualified personnel — Our ability to maintain our competitive position will depend to some considerable degree upon the personal commitment of our founder, Executive Chairman of the Board of Directors and Chief Executive Officer ad interim, Mr. Pasquale Natuzzi, as well as on our ability to continue to attract and maintain highly qualified managerial, finance, IT, manufacturing and sales and marketing personnel. As previously disclosed, Mr. Antonio Achille, our former Chief Executive Officer and executive director, stepped down from his roles effective as of July 30, 2025 and pending the appointment of a successor, the Board of Directors has temporarily delegated the Chief Executive Officer’s powers and responsibilities to Mr. Pasquale Natuzzi, who serves in an interim capacity. There can be no assurance that the loss of key personnel, or the difficulties in attracting and retaining other talented and experienced personnel, would not have a material adverse effect on our results of operations. See “Item 6. Directors, Senior Management and Employees”. Investors may face difficulties in protecting their rights as shareholders or holders of ADSs — The Company is incorporated under the laws of the Republic of Italy. As a result, the rights and obligations of its shareholders and certain rights and obligations of holders of its ADSs are governed by Italian law and the Company’s statuto (or the By-laws). These rights and obligations are different from those that apply to U.S. corporations. Furthermore, under Italian law, holders of ADSs have no right to vote the shares underlying their ADSs. However, pursuant to the Deposit Agreement (as defined below), ADS holders do have the right to give instructions to BNY Mellon, National Association (“BNY” or the “Depositary”), the ADS depositary, as to how they wish such shares to be voted. For these reasons, the Company’s ADS holders may find it more difficult to protect their interests against actions of the Company’s management, board of directors or shareholders than they would if they were shareholders of a company incorporated in the United States. One shareholder has a controlling stake in the Company — Mr. Pasquale Natuzzi, founder of the Company and Executive Chairman of the Board of Directors and Chief Executive Officer ad interim, beneficially owns, as of the date of this Annual Report, an aggregate amount of 30,967,521 ordinary shares of the Company (the “Ordinary Shares”), representing 56.2% of the Ordinary Shares outstanding (61.3% of the Ordinary Shares outstanding if the Ordinary Shares owned by members of Mr. Natuzzi’s immediate family (the “Natuzzi Family”) are aggregated). As a result, Mr. Natuzzi has the ability to exert significant influence over our corporate affairs and to control the Company, including its management and the selection of its board of directors. Since December 16, 2003, Mr. Natuzzi has held his entire beneficial ownership of Natuzzi S.p.A. shares through INVEST 2003 S.r.l., an Italian holding company wholly-owned by Mr. Natuzzi with its registered office located at Via Gobetti 8, Taranto, Italy. In addition, under the Deposit Agreement dated as of May 15, 1993, as amended and restated from time to time (the “Deposit Agreement”), among the Company, the Depositary, and owners and beneficial owners of ADSs, the Natuzzi Family has a right of first refusal to purchase all the rights, warrants or other instruments which BNY Mellon, as Depositary under the Deposit Agreement, determines may not lawfully or feasibly be made available to owners of ADSs in connection with each rights offering, if any, made to holders of Ordinary Shares. 13 Table of Contents Because a change of control of the Company would be difficult to achieve without the cooperation of Mr. Natuzzi and the Natuzzi Family, the holders of the Ordinary Shares and the ADSs may be less likely to receive a premium for their shares upon a change of control of the Company. Past and future grants of share-based awards may have an adverse effect on our financial condition and results of operations and have dilutive impact to your investment — In 2022, we adopted the Natuzzi 2022-2026 Stock Option Plan (the “SOP”) to grant share-based compensation awards to key employees and directors to incentivize their performance and align their interests with ours. The maximum number of Ordinary Shares we are authorized to issue pursuant to the SOP is 5,485,304 Ordinary Shares. As of March 31, 2025, we have granted stock options for the purchase of a total of 2,812,560 Ordinary Shares (equivalent to 562,512 ADSs), of which 220,000 Ordinary Shares (equivalent to 44,000 ADSs) were subscribed for in 2022. See “Item 6. Directors, Senior Management and Employees-Compensation of Directors and Officers-Natuzzi 2022-2026 Stock Option Plan” and Note 24 included in the Consolidated Financial Statements. If we grant any stock options to attract and retain key personnel, our expenses associated with share-based compensation may increase, which may have an adverse effect on our financial condition and results of operations and have a dilutive impact on your investment. However, if we do not grant stock options or reduce the number of stock options that we grant, we may not be able to attract and retain key personnel. Purchasers of our Ordinary Shares and ADSs may be exposed to increased transaction costs as a result of the Italian financial transaction tax or the proposed European financial transaction tax — On February 14, 2013, the European Commission adopted a proposal for a directive on the financial transaction tax (hereafter “EU FTT”) to be implemented under the enhanced cooperation procedure by 11 member states initially (Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovenia, Slovakia and Spain). Following Estonia’s formal withdrawal on March 16, 2016, 10 member states continued to participate in the negotiations on the proposed directive. If the proposed directive is adopted and implemented in local legislation, investors in Ordinary Shares and ADSs may be exposed to increased transaction costs. However, in its work program for 2026, the European Commission indicated that it intends to withdraw the EU FTT proposal. The Italian financial transaction tax (the “IFTT”) applies with respect to trades entailing the transfer of (i) shares or equity-like financial instruments issued by companies resident in Italy, such as the Ordinary Shares; and (ii) securities representing the shares and financial instruments mentioned under (i) above (including depositary receipts such as the ADSs), regardless of the residence of the issuer. The IFTT may also apply to the transfer of Ordinary Shares and ADSs by a U.S. resident. The IFTT does not apply to companies having an average market capitalization lower than €500 million in the month of November of the year preceding the year in which the trade takes place. In order to benefit from this exemption, companies whose securities are listed on a foreign regulated market, such as the Company, need to be included on a list published annually by the Italian Ministry of Economy and Finance. Since the Company has not been included in the list issued by the Italian Ministry of Economy and Finance of companies having an average market capitalization lower than €500 million in the month of November 2024, the IFTT would apply on transfers of Ordinary Shares or ADSs made in 2026. See “Item 10. Additional Information-Taxation-Other Italian Taxes-Italian Financial Transaction Tax.” Emerging issues related to our development, integration and use of artificial intelligence (“AI”) could give rise to legal or regulatory action, damage our reputation or otherwise materially harm our business — We increasingly develop, integrate and use AI technology in our operations, including to drive productivity and data analytics. While we aim to develop, integrate and use AI responsibly, including attempting to identify and mitigate ethical or legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues, such as accuracy issues, cybersecurity risks, unintended biases, and discriminatory outputs, before they arise. AI is a relatively new and emerging technology in early stages of commercial use and presents a number of risks inherent in its use by us, our customers, suppliers and other business partners and third-party providers, or through the use of third-party hardware and software. These risks include, but are not limited to, ethical considerations, public perception, intellectual property protection, regulatory compliance, privacy concerns and data security, all of which could have a material adverse effect on our business, reputation, results of operations and financial position. As a result, we cannot predict future developments in AI and related impacts to our business and our industry. If we are unable to successfully and accurately develop, integrate and use AI technology, as well as address the risks and challenges associated with AI, our business, reputation, results of operations and financial position could be negatively impacted. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our reputation, business, financial condition, and results of operations may be materially adversely affected. While we are implementing measures designed to mitigate the potential adverse effects associated with the development, integration and use of AI technologies, such as policies, governance framework and internal controls designed to promote the responsible and compliant use of AI within our operations, there can be no assurance that these measures will be sufficient to prevent or mitigate all associated risks or their potential impacts on our business. We may be unable to remain in compliance with the New York Stock Exchange requirements for continued listing and as a result our ADSs may be delisted from trading on the New York Stock Exchange, which would have a material effect on us and the liquidity of our ADSs – On January 6, 2026, we received notice from the New York Stock Exchange (“NYSE”) that we were no longer in compliance with the continued listing standards set forth in Section 802.01B of the NYSE Listed Company Manual 14 Table of Contents because our 30 trading-day average market capitalization and our last reported stockholders’ equity as of September 30, 2025 were each below U.S.$50 million. Following receipt of the notice, on February 5, 2026, we disclosed to the market that we were considering available alternatives to cure the deficiency and regain compliance with the applicable continued listing standards and, on February 18, 2026, notified the NYSE accordingly. Pursuant to Section 802.03 of the NYSE Listed Company Manual, a company has an 18-month cure period following receipt of the notice of non-compliance to regain compliance with the NYSE’s minimum requirements, subject to the NYSE’s receipt and approval of a plan submitted by the company demonstrating how the company intends to regain compliance with the NYSE’s continued listing standards. In accordance with the timing requirement under the notice and pursuant to Section 802.03 of the NYSE Listed Company Manual, we submitted a remediation plan on April 6, 2026, which, as of the date of this Annual Report, is under the 45-day review period by the NYSE. We cannot assure that (i) the plan will be accepted by the NYSE, (ii) even if accepted, we will be able to meet the milestones set forth therein, or (iii) we will regain compliance with the NYSE continued listing standards. If the plan is not accepted by the NYSE, or if we otherwise fail to regain or maintain compliance with any continued listing requirements of the NYSE Listed Company Manual, the NYSE may commence delisting proceedings or take any other action in the course of monitoring our compliance with these requirements. 15 Table of Contents