Shares of Nova LifeStyle, Inc. (NVFY) have risen 13.9% since the company announced its financial results for the quarter ended March 31, 2025. This outpaced the S&P 500 Index, which rose 0.7% during the same period. Over the past month, NVFY’s stock has experienced a remarkable 76.5% gain, significantly exceeding the S&P 500’s 12.1% increase.NVFY’s Revenue Growth and Profitability TrendsNova LifeStyle reported net sales of $2.6 million for the first quarter of 2025, marking a 10.9% increase from $2.4 millio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission file number: 001-36259 Washington, D.C. 20549 NOVA LIFESTYLE, INC. FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) Nevada 90-0746568 (State or other jurisdiction of incorporation or organization) 6565 E. W ...

LOS ANGELES, May 15, 2025 (GLOBE NEWSWIRE) -- Nova LifeStyle, Inc. (NASDAQ: NVFY) (“Nova LifeStyle” or the “Company”) today announced financial results for the first quarter ended March 31, 2025. Mr. Xiaohua Lu, newly appointed Chief Executive Officer of Nova LifeStyle, stated, “This is a very exciting time for Nova LifeStyle as we strategize moving forward among the uncertainty related to tariffs and the impact on the furniture industry. The first quarter showed our products are well received considering a ...

Core Insights - Nova LifeStyle, Inc. (NVFY) experienced a 15.5% decline in share price following its earnings report for the year ended December 31, 2024, compared to an 8.9% decline in the S&P 500 Index during the same period [1] Revenue Growth and Profitability Metrics - For the full year 2024, Nova LifeStyle reported net sales of $9.7 million, a 12.6% decline from $11.1 million in 2023, primarily due to a 39% drop in sales volume, partially offset by a 43% increase in average selling price [2] - Despite the decline in sales, gross profit increased by 1.8% to $4.25 million from $4.17 million a year ago, resulting in a gross margin improvement to 44% from 38% in 2023 [3] Geographic Performance - Sales in the United States increased by 7.6% to $9.4 million from $8.8 million, while sales in other countries fell by 23.9% to $0.25 million from $0.33 million, with no revenue generated from Asia [4] Business Strategy and Management Commentary - The company achieved a significant expansion in gross margin to 44% from 38%, driven by a shift in product mix towards higher-value offerings and a strategic emphasis on quality over quantity [5] - Management, led by Chairperson and CEO Tawny Lam, emphasized ongoing transformation efforts, operational improvements, and resilience against external challenges, expressing confidence in the company's strategic positioning for future success [6] Factors Influencing Financial Performance - The revenue decline was primarily due to a 39% drop in sales volume, overshadowing the benefits of a higher average selling price, while the pivot away from low-margin liquidation sales positively influenced gross profit and margin expansion [7] Future Outlook - Nova LifeStyle did not provide quantitative guidance for fiscal 2025 but indicated ongoing efforts to capitalize on market opportunities through product revamps and potential acquisitions, focusing on structural realignment and margin preservation [8]

Sales and Market Focus - In 2024, Nova LifeStyle's sales to North America accounted for 97.4% of total sales, compared to 79.1% in 2023[45] - The largest selling product categories for the year ended December 31, 2024, were sofas (50%), beds (13%), and coffee tables (8%) from continuing operations[40] - The company plans to expand direct sales and marketing efforts in North America, particularly the U.S., which is the largest market for imported furniture[51] - In 2024, sales to North America accounted for 97.4% of total sales from continuing operations, up from 79.1% in 2023, reflecting a strategic shift towards the U.S. market[59] - The company sold products in approximately 11 countries in 2024, with a focus on expanding direct sales to retailers and chain stores worldwide[59] Business Operations and Employee Structure - The company has 27 full-time employees worldwide as of December 31, 2024, with 24 in the U.S. and 3 in Malaysia[28] - As of December 31, 2024, the company employed 27 full-time employees, with 24 in the U.S. and 3 in Malaysia, indicating a lean operational structure[72] Financial Performance - Net sales for the year ended December 31, 2024 were $9.69 million, a decrease of 13% from $11.09 million in 2023, primarily due to a 39% decrease in sales volume, partially offset by a 43% increase in average selling price[212] - Gross profit increased to $4.25 million for the year ended December 31, 2024, compared to $4.17 million in 2023, resulting in a gross profit margin of 44%, up from 38%[215] - Operating expenses decreased to $9.61 million for the year ended December 31, 2024, from $10.59 million in 2023, with selling expenses down by 36% and research and development expenses down by 36%[216] - The net loss for the year ended December 31, 2024 was $5.56 million, an improvement from a net loss of $7.72 million in 2023[219] Product and Market Strategy - The company aims to mitigate risks such as economic instability and supply chain disruptions by diversifying its product range and building strong supplier relationships[48] - The company introduced new collections and design styles at international furniture exhibitions, supported by marketing campaigns[42] - The company has shifted focus from low margin products to higher-end offerings, launching the Summer 2023 Collection to attract a more affluent customer base[165] Supply Chain and Tariff Impacts - The company is subject to various tariffs, including a 25% tariff on products imported from Canada and Mexico and a 10% tariff on products imported from China, which could impact costs and profitability[63][64] - The U.S. government has increased tariffs of 25% on furniture products from China and imposed a 10% tariff on products imported from China, effective February 4, 2025, with an additional 10% increase effective March 4, 2025[109] - The Company is transitioning a portion of its manufacturing from China to other Asian countries like Vietnam and India to mitigate the impact of U.S. tariffs[165] Research and Development - In 2024, Nova Malaysia invested $2.00 million in research and development, down from $3.12 million in 2023, focusing on Virtual and Augmented reality software and AI systems[69] Legal and Compliance Risks - The company is subject to periodic litigation and regulatory proceedings, which could result in unexpected expenses and divert management's attention from operations[99] - The company has incurred significant costs due to compliance with regulatory requirements as a public company, including legal and accounting expenses[103] - The company has been named in a putative securities class action case and two derivatives cases, which could divert management's attention and incur significant legal costs[99] Customer Base and Sales Diversification - One customer accounted for 18% of total sales in 2023, while no customer exceeded 10% of total sales in 2024, indicating a diversification of the customer base[57] Future Growth and Capital Needs - The company plans to expand operations, including increasing online sales and diversifying international sales, but effective management of this growth is critical[85] - Additional capital may be needed for business expansion, with uncertainties regarding the ability to obtain such capital on acceptable terms[86] Financial Health and Liquidity - The company intends to meet liquidity requirements through cash flow from operations, collections of accounts receivable, and bank credit facilities[220] - The company relies on dividends from its wholly owned subsidiaries to meet cash needs, and any inability of these subsidiaries to pay dividends could negatively impact the company's business[108] Market Challenges - The furniture industry is highly competitive, with significant competition from manufacturers and distributors primarily located in China and Southeast Asia[62] - The U.S. furniture market is highly competitive, with risks of losing market share due to competitors with greater resources and brand recognition[81] - The markets in North America are facing challenges due to high interest rates and inflation, potentially leading to a recession[165]

Core Viewpoint - Nova LifeStyle, Inc. has undergone significant changes in operations and product offerings to adapt to market challenges and improve long-term strategy [2] Financial Performance - Net sales for the year ended December 31, 2024, were $9.69 million, a decrease of 13% from $11.09 million in 2023, primarily due to a 39% decrease in sales volume, partially offset by a 43% increase in average selling price [7] - Gross profit for the year was $4.25 million, an increase of $0.08 million compared to $4.17 million in 2023, with a gross profit margin of 44% in 2024, up from 38% in 2023 [7] - The net loss for the year was $5.56 million, an improvement from a net loss of $7.72 million in 2023 [7] Company Overview - Nova LifeStyle, Inc. is a designer and distributor of modern lifestyle furniture, including sofas, dining room furniture, cabinets, and office furniture, targeting middle and upper middle-income consumers in various regions [4]

Financial Performance - Net sales for the three months ended September 30, 2024, were $2.62 million, a 6% increase from $2.48 million in the same period of 2023, primarily due to a 19% increase in average selling price[243]. - Gross profit for the three months ended September 30, 2024, was $1.18 million, representing a gross profit margin of 45%, up from 43% in the same period of 2023[247]. - Operating expenses increased to $3.59 million for the three months ended September 30, 2024, compared to $2.12 million for the same period of 2023, driven by a 28% increase in general and administrative expenses[248]. - Net loss for the three months ended September 30, 2024, was $2.47 million, compared to a net loss of $1.29 million for the same period of 2023[251]. - For the nine months ended September 30, 2024, net sales were $7.68 million, a 13% decrease from $8.81 million in the same period of 2023, primarily due to a 43% decrease in sales volume[253]. - Gross profit for the nine months ended September 30, 2024, was $3.39 million, with a gross profit margin of 44%, up from 36% in the same period of 2023[256]. - Cost of sales for the nine months ended September 30, 2024, decreased by 24% to $4.29 million, with cost of sales as a percentage of sales decreasing to 56% from 64% in the same period of 2023[255]. - Sales to North America increased by $0.89 million to $7.51 million for the nine months ended September 30, 2024, compared to $6.62 million for the same period of 2023[254]. - Other expenses, net, decreased to $58,986 for the three months ended September 30, 2024, from $90,321 in the same period of 2023, primarily due to a decrease in foreign exchange loss[249]. - Income tax expenses for the three months ended September 30, 2024, were $211, a significant decrease from $147,371 in the same period of 2023, due to no taxable income from Nova Malaysia[250]. - Operating expenses increased to $7.78 million for the nine months ended September 30, 2024, up from $5.79 million in the same period of 2023, representing a 34% increase[257]. - Research and development expenses surged by 193%, reaching $1.97 million for the nine months ended September 30, 2024, compared to just $10,144 for the same period in 2023[257]. - Net loss for the nine months ended September 30, 2024, was $4.49 million, an increase from a net loss of $3.05 million for the same period in 2023[261]. - Cash used in operating activities was $1.13 million for the nine months ended September 30, 2024, a decrease of $2.65 million from cash provided by operating activities of $1.52 million in the same period of 2023[264]. Compliance and Regulatory Matters - On April 18, 2024, the company was notified by NASDAQ that it did not meet the requirement of maintaining a minimum of $2,500,000 in stockholders' equity for continued listing[192]. - The company submitted a compliance plan to NASDAQ on May 28, 2024, and received an extension until October 14, 2024, to regain compliance[194]. - Nova LifeStyle entered into orders to purchase inventories totaling $4,650,000, to be paid in 3,321,429 shares at $1.40 per share, which the company believes will help regain compliance with stockholders' equity requirements[195]. Financing and Capital Structure - The company received loan proceeds of approximately $139,802 under the Paycheck Protection Program and $176,294 from Cathay Bank, along with a $150,000 SBA loan[191]. - The company completed a registered direct offering in July 2021, raising gross proceeds of $3,120,622, and two private placements in May and August 2024 for $600,000 each[191]. - The company has increased its authorized shares from 3,000,000 to 250,000,000 as of September 5, 2023[203]. - Net cash provided by financing activities was $0.96 million for the nine months ended September 30, 2024, compared to $0 for the same period in 2023[268]. Operational Changes - The company has shifted a portion of its manufacturing from China to other Asian countries like Vietnam and India to mitigate tariff impacts[197]. - The company launched its Summer 2024 Collection in Las Vegas and High Point Markets, focusing on attracting higher-end customers[197]. Tax and Earnings - The income tax expense for the nine months ended September 30, 2024, was $5,087, significantly lower than $149,771 for the same period in 2023[208]. - The company maintained unrecognized tax benefits of approximately $0 as of September 30, 2024, indicating no anticipated significant changes in the next 12 months[219]. - The accumulated undistributed earnings from foreign subsidiaries were approximately $25.4 million as of September 30, 2024, with no deferred tax expense recorded[218]. Accounts Receivable and Credit Losses - As of September 30, 2024, the allowance for expected credit losses on accounts receivable was $1,281, compared to $532 as of December 31, 2023[205]. - The gross accounts receivable as of September 30, 2024, was $128,081, with $2,546 being over 90 days past due[205]. - As of September 30, 2024, gross accounts receivable totaled $128,081, with 61.6% or $78,930 collected by November 4, 2024[269]. - Advances to suppliers increased to $132,678 as of September 30, 2024, up from $93,740 at December 31, 2023[270]. - Advances to suppliers are generally received within 4 to 6 months from the date of advance payment, indicating a stable supply chain[206]. Legal and Governance - The company is not currently involved in any legal proceedings that could materially affect its business or financial condition[288]. - There were no insider trading arrangements adopted or terminated by the company's directors or executive officers during the quarterly period covered by the report[288]. Accounting Policies - The company adopted ASU 2017-04 for goodwill impairment tests beginning January 1, 2023, with no impact on the financial statements[236]. - The company recognizes revenue from product sales when control is obtained by the customer, typically upon shipment[222]. Currency and Translation - The translation rate for Malaysian Ringgit to U.S. dollars was RM4.12 to 1 as of September 30, 2024, compared to RM4.59 to 1 as of December 31, 2023[230].

Group 1: Company Performance - Nova Lifestyle Inc. experienced a significant stock price decline of 5.30%, reaching $1.34 per share with a trading volume of 6,867 shares [1] - The latest financial report indicated an operating income of $2.69 million and a net loss of $563,489, resulting in an earnings per share of -$0.22 [2] - The gross profit was reported at $1.19 million, with a price-to-earnings ratio of -0.30, and currently, there are no institutional ratings or recommendations for the stock [2] Group 2: Industry Context - The furniture and appliances sector overall decreased by 1.12%, while Nova Lifestyle's stock volatility was noted at 3.89% [1] - Other companies in the same industry, such as Energy Focus, Inc., Viomi Technology, and Northann Corp., showed notable gains, while Lovesac Company, Mohawk Industries, and Irobot Corporation had significant trading activity with turnover rates of 0.67%, 0.66%, and 0.56% respectively [3] - Stocks like Fgi Industries Ltd C/Wts, Viomi Technology, and Purple Innovation, Inc. experienced higher volatility with swings of 13.12%, 10.37%, and 7.93% respectively [3] Group 3: Company Overview - Nova Lifestyle designs and distributes modern-style furniture for both residential and commercial markets, offering retail and online purchasing options globally [4] - The company manages various bedding component sales and its lifestyle furniture brands, including Diamond Sofa, are produced in the U.S. and Asia, primarily catering to distributors and retailers of mid-to-high-end private-label home products [4]

Financial Performance - Net sales for the three months ended June 30, 2024 were $2.69 million, a decrease of 40% from $4.46 million for the same period in 2023, primarily due to a 69% decrease in sales volume[195]. - Gross profit was $1.19 million for the three months ended June 30, 2024, compared to $1.45 million for the same period in 2023, representing a decrease of $0.25 million, while the gross profit margin increased to 44% from 32%[199]. - Operating expenses were $1.69 million for the three months ended June 30, 2024, a decrease of 7.2% from $1.83 million for the same period in 2023, primarily due to a 28% decrease in selling expenses[200]. - Net loss for the three months ended June 30, 2024 was $0.56 million, compared to a net loss of $0.54 million for the same period in 2023[203]. - For the six months ended June 30, 2024, net sales were $5.06 million, a decrease of 20% from $6.34 million for the same period in 2023, mainly due to a 52% decrease in sales volume[205]. - Gross profit for the six months ended June 30, 2024 was $2.21 million, an increase of $0.10 million from $2.11 million for the same period in 2023, with a gross profit margin of 44% compared to 33%[208]. - Operating expenses for the six months ended June 30, 2024 were $4.20 million, an increase of 14.4% from $3.67 million for the same period in 2023, driven by a significant increase in research and development expenses[209]. - Net loss for the six months ended June 30, 2024, was $2.03 million, compared to a net loss of $1.76 million for the same period in 2023[212]. Compliance and Legal Matters - The company is currently not in compliance with NASDAQ listing rules, failing to maintain a minimum of $2,500,000 in stockholders' equity[157]. - The company submitted a compliance plan to NASDAQ on May 28, 2024, and received an extension until October 14, 2024, to regain compliance[158]. - The company settled a class action lawsuit for $750,000 without admitting liability[229]. - The Company is not currently involved in any legal proceedings that could materially affect its business or financial condition[234]. Inventory and Sales - The company reported a liquidation sale of jade mats inventory for $2.00 million in June 2023, marking its exit from the jade mats business[155]. - Sales to Asia decreased by 100% to $0 million for the three months ended June 30, 2024, compared to $1.99 million for the same period in 2023, due to liquidation sales of jade mats[196]. - Sales to North America increased by $0.76 million to $4.96 million for the six months ended June 30, 2024, from $4.19 million for the same period in 2023, primarily due to more sales orders received[206]. Financing and Cash Flow - The company received loan proceeds of approximately $139,802 under the Paycheck Protection Program (PPP) and an additional loan of $176,294 from Cathay Bank[156]. - Net cash used in operating activities was $690,415 for the six months ended June 30, 2024, an increase in cash outflow of $2.12 million from $1.43 million cash provided in the same period of 2023[215]. - Net cash provided by financing activities was $760,000 for the six months ended June 30, 2024, compared to $0 for the same period in 2023[217]. - The company plans to meet liquidity requirements primarily through cash flow from operations and collections of accounts receivable[213]. Operational Changes - The company has shifted a portion of its manufacturing from China to other Asian countries, such as Vietnam and India, to mitigate the impact of U.S. tariffs[161]. - The company launched its Summer 2024 Collection in Las Vegas and High Point Markets, focusing on attracting higher-end customers[161]. - The company operates in a single reportable segment focused on the design and sale of furniture, with operations in the U.S. and Malaysia[186]. Accounting and Financial Reporting - The company adopted ASU 2017-04 for goodwill impairment tests beginning January 1, 2023, with no impact on financial statements[188]. - The company recognizes revenues when control of goods is obtained, following a five-step model under ASU No. 606[178]. - As of June 30, 2024, the company maintained an allowance for expected credit losses of $449, down from $532 as of December 31, 2023[166]. - The expected credit losses provision for the six months ended June 30, 2024, was a reversal of ($83), compared to a reversal of ($196) for the same period in 2023[166]. - The gross accounts receivable as of June 30, 2024, was $44,918, with none over 90 days past due[166]. - The income tax expense for the six months ended June 30, 2024, was $4,876, compared to $2,400 for the same period in 2023[169]. - The company had accumulated undistributed earnings from foreign subsidiaries of approximately $25.2 million as of June 30, 2024[175]. - Unrecognized tax benefits were approximately $0 as of June 30, 2024, indicating no anticipated significant changes in the next 12 months[175]. Shareholder and Equity Matters - The company completed a registered direct offering of common stock in July 2021, raising gross proceeds of $3,120,622[156]. - The company increased its authorized shares from 3,000,000 to 250,000,000 as part of an amendment to its Articles of Incorporation[164]. - Advances to suppliers were $50,793 as of June 30, 2024, down from $93,740 at December 31, 2023[218]. - Long-term taxes payable recorded as of June 30, 2024, amounted to $640,000, primarily from a one-time transition tax[219]. - As of June 30, 2024, 77.1% of accounts receivable outstanding had been collected[217]. Other Financial Information - Other expenses, net decreased by $96,995 to $60,949 for the three months ended June 30, 2024, compared to $157,944 for the same period in 2023, mainly due to a decrease in foreign exchange loss[201]. - Other expenses decreased by $161,335 to $35,314 for the six months ended June 30, 2024, primarily due to a foreign exchange gain increase of $204,310[210]. - Working capital deficit decreased by $382,527 to $322,470 as of June 30, 2024, from a net working capital of $60,057 at December 31, 2023[214]. - No insider trading arrangements were adopted or terminated by the Company's directors or executive officers during the quarterly period[234]. - There are no unregistered sales of equity securities or use of proceeds reported during the quarterly period[234].

Financial Performance - Net sales for the three months ended March 31, 2024, were $2.38 million, a 27% increase from $1.87 million in the same period of 2023, driven by a 30% increase in sales volume[245]. - Gross profit increased to $1.02 million for the three months ended March 31, 2024, compared to $0.66 million for the same period of 2023, resulting in a gross profit margin of 43%[248]. - Operating expenses rose to $2.50 million for the three months ended March 31, 2024, from $1.84 million in the same period of 2023, with research and development expenses increasing by 636,524% to $0.75 million[249]. - The net loss for the three months ended March 31, 2024, was $1.46 million, compared to a net loss of $1.22 million for the same period of 2023[252]. - Cash used in operating activities was $0.22 million for the three months ended March 31, 2024, a decrease in cash outflow by $0.51 million from $0.73 million in the same period of 2023[256]. - Sales to North America increased by 32% to $2.33 million for the three months ended March 31, 2024, compared to $1.76 million for the same period of 2023[246]. - Cost of sales increased by 12% to $1.36 million for the three months ended March 31, 2024, with cost of sales as a percentage of sales decreasing to 57% from 65%[247]. - Other income, net was $25,635 for the three months ended March 31, 2024, compared to other expenses, net of $38,705 for the same period of 2023, representing an increase of $64,340[250]. Assets and Liabilities - As of March 31, 2024, the company had a working capital deficit of $441,348, a decrease of $501,405 from net working capital of $60,057 at December 31, 2023[255]. - As of March 31, 2024, 85.3% of accounts receivable outstanding had been collected, with gross accounts receivable totaling $137,264[259]. Taxation - The company had no income tax expense for the three months ended March 31, 2024, and 2023[208]. - Unrecognized tax benefits were approximately $0 as of March 31, 2024, with no anticipated significant changes in the next 12 months[218]. - The corporate tax rate decreased from 35% to 21% effective for tax years beginning after December 31, 2017, due to the Tax Cuts and Jobs Act of 2017[214]. - The Company is subject to Malaysia income taxes at a statutory rate of 24%[212]. - The Tax Cuts and Jobs Act of 2017 introduced new taxes on certain foreign-sourced earnings, effective for tax years beginning after January 1, 2018[213]. - The CARES Act, enacted on March 27, 2020, includes provisions relaxing limitations on the deductibility of interest and the use of net operating losses[215]. - Beginning in 2022, the Tax Cuts and Jobs Act requires taxpayers to amortize research and development expenditures over five years[216]. - As of March 31, 2024, the accumulated undistributed earnings from foreign subsidiaries were approximately $25.3 million, which were previously subject to U.S. tax, GILTI, or the one-time transition tax[217]. Business Operations - The company sold its entire jade mats inventory for $2.00 million in liquidation sales in June 2023, exiting the jade mats business[196]. - Nova LifeStyle completed a registered direct offering of common stock in July 2021, raising gross proceeds of $3,120,622[197]. - The company shifted a portion of its manufacturing from China to other Asian countries, such as Vietnam and India, to mitigate tariff impacts[199]. - The company launched its Summer 2023 Collection in the Las Vegas and High Point Markets, focusing on attracting higher-end customers[199]. - The Company operates exclusively in one business segment: the design and sale of furniture[233]. Stock and Shares - A 1-for-5 reverse stock split was executed on May 22, 2023, affecting the company's authorized shares of common stock[203]. - The company increased its authorized shares from 3,000,000 to 250,000,000 as of September 5, 2023[204]. Credit and Receivables - The allowance for expected credit losses increased to $1,373 as of March 31, 2024, from $532 as of December 31, 2023[206]. - Nova LifeStyle reported a gross receivable of $137,264 as of March 31, 2024, with no amounts over 90 days past due[206]. Currency and Exchange Rates - The exchange rate for translating Malaysian Ringgit to U.S. dollars was RM4.72 to 1 as of March 31, 2024[231]. - The financial statements are presented in U.S. dollars, with foreign currency transactions translated at prevailing exchange rates[229]. Market Conditions - The company aims to maintain a relatively high gross profit margin despite challenges in the North American market due to high interest rates and inflation[199].