Nova LifeStyle(NVFY) - 2024 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended March 31, 2024, were $2.38 million, a 27$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$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$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$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].